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Medicare News
Major Medicare Change Slipped in Without Senate or
House Vote Will Have Higher Income Senior Citizens Pay More for Part B
Surcharge will hit those who earn more than
$80,000 a year
 September 11, 2006 - A Republican dominated
committee quietly added a provision in the 2003 Medicare Modernization
Act, which was not included in the versions passed by the House or
Senate, that will add a surcharge to the Part B Medicare premium for
senior citizens with incomes above $80,000. It starts with 2007 with a
surcharge of 13 percent and will be phased in over three years. Medicare
has made no public mention of this change, not even in the July fact
sheet on Part B costs, which estimated the Part B premium for 2007 would
be less than $100 per month.
 Higher-Income Medicare Beneficiaries To Pay Higher
Part B Premiums Next Year
Higher-income Medicare beneficiaries in 2007 will
be required for the first time to pay higher Part B premiums, a change
that is projected to increase federal revenue by about $20.8 billion
from 2007 to 2016,
McClatchy/Sacramento Bee reports (Pugh, McClatchy/Sacramento
Bee, 9/11). The means testing, which will be phased in over three years,
will affect about 1.2 million beneficiaries in 2007 and 2.8 million by
2013, according to the
Congressional
Budget Office (Moss,
Dallas Morning News,
9/11).
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Medicare Premiums Expected to Jump 450 Percent for
Some Seniors as Means Testing Takes Effect for First Time in History,
Says Senior Group
50,000 senior citizens predicted to abandon
Medicare for private insurance in 2007, leaving system burdened with
oldest and sickest – TREA Senior Citizens League
September 11, 2006 - The Department of Health and
Human Services (HHS) will announce Medicare Part B premiums for 2007
later this month, which will increase significantly for all seniors and
dramatically for seniors with incomes of more than $80,000 per year.
Excluded from their announcement will be the fact that some seniors will
see their premiums jump by as much as 450 percent in just over two
years, according to a news release from the TREA Senior Citizens League.
Read more...
Opinion: Medicare Means Testing a Costly Slip
Senior citizen group supports House bill to repeal
higher Medicare premiums based on income
By Ralph McCutchen
Note: The following was written by Ralph McCutchen, chairman of the TREA
Senior Citizens League, and first published September 1, 2006.
September 11, 2006 - For the first time since Medicare's creation 41
years ago, seniors will no longer pay the same amount for the same
services. Premium rates for Part B - expected to be announced later this
month by the Department of Health and Human Services for 2007 - now will
be means tested, that is, determined based on income.
Read
more...
Medicare Part B Premiums to Reach Nearly $100 a
Month in 2007
Medicare looks at rising costs, which project
premium jump over 11%
July 12, 2006 – The hidden message in a fact sheet
issued by the Centers for Medicare and Medicaid Services yesterday is
that Medicare Part B premiums for senior citizens will jump to almost
$100 a month next year. The headline on the CMS fact sheet started with,
"Medicaid Spending Projections Down Again." But the big news is rates
are getting ready to take a double digit jump of over 11 percent. (Read
fact sheet below news story.)
Read more...
Read more
on
Medicare
or
Medicare Drug Program |
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The premium increases were established under a
"little-noticed provision" of the 2003 Medicare law, the
New York Times
reports.
The provision calls for beneficiaries with higher
incomes to pay an income-based surcharge on the standard Part B monthly
premium, which Medicare officials estimated will be $98.40 for 2007.
Individual beneficiaries with adjusted gross annual incomes of $80,000
to $100,000 will pay a surcharge of 13.3%, or about $13 per month, for a
total monthly premium of about $111.50, according to the Times.
For individual beneficiaries with adjusted gross
annual incomes of more than $200,000, the surcharge will be 73.3%, or
about $72 per month, for a total monthly premium of about $170.50. By
January 2009, higher-income beneficiaries will be paying 1.4 to 3.2
times the standard Part B premium, depending on their incomes.
According to the Times, "If the basic premium rises
10% a year -- a relatively conservative forecast -- the most affluent
beneficiaries will be paying premiums of more than $375 a month in
2009." The standard premium has increased an average of 12% since 2001.
Currently, Medicare beneficiaries pay Part B
premiums covering about 25% of their health care costs, with general tax
revenues covering the remaining 75% (Pear, New York Times, 9/11). By
2009, higher-income beneficiaries will be paying premiums covering 35%
to 80% of their health care costs (Dallas Morning News, 9/11). Medicare
will explain the changes in the 2007 "Medicare and You" handbook, which
will be mailed in October, and the
Social Security
Administration will send a reminder letter to beneficiaries
in November (McClatchy/Sacramento Bee, 9/11).
Lawmaker Comments
The Times reports that the charge is supported by "[f]iscally
conservative Republicans" as well as "some Democrats" who see it as a
"progressive way to finance Medicare without cutting benefits or raising
payroll taxes."
Sen. Dianne Feinstein (D-Calif.) asserted that
"high-income beneficiaries can afford to pay a larger share of
Medicare's costs," in part because they have received tax cuts in recent
years.
However Rep. Nita Lowey (D-N.Y.) recently
introduced a bill to repeal the higher premium fees, saying that they
will impact "more and more middle-class seniors" (New York Times, 9/11).
Lowey's bill has stalled in a House committee (McClatchy/Sacramento Bee,
9/11).
Inflation Adjustments
The 2003 Medicare law also calls for the income brackets affected by
the means testing to be adjusted for inflation in future years (New York
Times, 9/11). President Bush in his 2007 budget proposal calls for
elimination of the inflation-based adjustments, a change that would
increase the number of beneficiaries paying the means-tested premium to
about 8% of all beneficiaries by 2016, according to outgoing
CMS
Administrator Mark McClellan (McClatchy/Sacramento Bee, 9/11).
Bush said, "This change gives beneficiaries
increased participation in their health care" (New York Times, 9/11).
Concerns
According to McClatchy/Bee, the change has "enraged many because it
was adopted without public debate." It was not contained in either the
House or Senate version of the Medicare bill but was added by a
"Republican-led conference committee," McClatchy/Bee reports.
Advocacy groups including
AARP,
the
Medicare Rights
Center and the
Senior Citizens
League oppose the change. According to McClatchy/Bee, critics
"say high-income beneficiaries paid more into Medicare during their
working lives and shouldn't have to pay more now."
The advocacy groups also are concerned that the
prospect of paying higher premiums will discourage seniors from seeking
employment. In addition, some groups "worry that the new premiums could
lead healthier, wealthier seniors to depart the Part B program, leading
to higher costs for those who remain," McClatchy/Bee reports. Shannon
Benton, executive director of the Senior Citizens League, said, "With
fewer people in it, the price has to go up to sustain the system. Our
fear is it will increase premiums for even the lower-income people."
David Certner, legislative policy director at AARP, said, "Continually
shifting the cost onto the people is not the answer. We need to figure
out why we're spending so much more as a nation on health care and our
health outcomes are no better than average" (McClatchy/Sacramento Bee,
9/11).
Additional Comments
According to the Times, the income-based premiums mark "a major
departure from the traditional arrangement" in which beneficiaries of
all income levels generally paid the same Part B premium (New York
Times, 9/11).
McClellan said, "We don't want people to pay a
large share of their income for their Medicare benefits, but we also
want to make sure these benefits are available for everyone for many
years to come" (McClatchy/Sacramento Bee, 9/11).
Pauline Rosenau, a professor of public health at
the
University of Texas
Health Science Center, said, "It's a modest change from a
financial perspective, but it represents a huge step philosophically"
(Dallas Morning News, 9/11).
Theodore Marmor, a professor of political science
at
Yale University,
said, "The new income-related premium is fundamentally at odds with the
premises of social insurance." He added, "Large numbers of upper-income
people will eventually want to find alternatives to Part B of Medicare
and will no longer be in the same pool with other people who are 65 and
older or disabled. Congress will then have less reluctance to cut the
program" (New York Times, 9/11).
Maria Freese, director of government relations and
policy for the
National Committee
to Preserve Social Security and Medicare, said, "I doubt
anyone will cry for the wealthy, but this opens the door for more severe
means testing," adding that she is concerned that Congress in the future
could lower the income threshold to include middle-income beneficiaries.
Freese said that if many beneficiaries drop Part B coverage, "Medicare
will become a welfare program with increasingly unsustainable costs."
Robert Moffit, director of the
Center for Health
Policy Studies at the Heritage Foundation, said, "With
rapidly increasing health care costs and an aging population that's
going to double, we can't afford to treat the millionaire senior in Boca
Raton, Fla., the same way we do the retired bus driver" (Dallas Morning
News, 9/11).
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Copyright: SeniorJournal.com |
September
11, 2006 - For the first time since Medicare's creation 41 years
ago, seniors will no longer pay the same amount for the same
services. Premium rates for Part B – which covers doctors' visits,
tests, and outpatient care – will now be determined based on income,
or "means testing".