Medicare Premium Spike Will Hit Some Low-Income People … and All States

I’m sure you’re aware that the seemingly endless Presidential campaign season has set off another round of debate on so-called entitlement reform — that, plus the need to somehow stave off a government shutdown.

Much of what we hear is what we’ve heard for a long time. Republicans want changes that will reduce the amount the federal government pays for Social Security retirement and Medicare benefits.

Democrats will have none of this. But turns out a goodly number now want reform too. Or so one gathers from their leaders in Congress and the still-leading candidate for the nomination.

For them, the issue isn’t how much the federal government pays. It’s how much about 16.5 million people — mostly seniors — may have to pay for Medicare Part B, the part that covers outpatient care, plus some other health-related costs.

They face significant increases due to our low inflation rate. This has led the Social Security Administration to conclude that a cost-of-living adjustment is unwarranted, since because the consumer price index it uses for COLAs has actually dipped down a bit.

But Part B spending almost surely won’t. It’s been rising steadily for a number of reasons, e.g., new technologies, increasing charges for services and “medically necessary” equipment for personal use, more services and supplies needed as those received prolong lives.

The Social Security Act shields about 70% of Medicare beneficiaries from premium hikes next year because it says that increases can’t exceed increases in their retirement benefits.

What this means is that the other 30% will get hit with higher increases because total premiums paid are supposed to cover a fourth of projected spending on seniors.

Medicare trustees have predicted that premiums could therefore rise to about $159 a month — or by 34%, on average, according to my calculator. But The New York Times reports that premiums for some could increase by about 50%.

So who are these unprotected beneficiaries? Some have relatively high incomes and thus already pay higher premiums than most — more than three times as much if they’re in the top income bracket.

Some, however, may have little or no income except their Social Security benefits. And those can be very small because they’re based on annual wages, including years when they totaled zero.

And some don’t receive any Social Security benefits. They include most seniors who didn’t work steadily for at least 10 years or had a spouse who did. Others are former recipients of Social Security Disability Insurance benefits who still qualify for Medicare.

Still others are elderly government employees who are covered under an old, separate retirement plan — more than 800,000 of them former federal workers.

Now, some of the low-income Medicare beneficiaries are only technically unprotected from the impending increases. They’re the so-called dual eligibles — seniors covered by both Medicare and Medicaid. State Medicaid programs pay their premiums.

This is also true for some other poor and near-poor seniors — those with incomes no greater than 100-135% of the federal poverty line, plus $20.

For individuals, that’s now a maximum of $16,140 a year and, for couples, about $21,755. Not all have protection, however. Only those with very limited assets they can draw on for emergencies or the deductibles and co-pays charged for Part B medical services and supplies.

Other seniors whom many analysts classify as near-poor will have to pay a share of the projected Part B cost increase. That’s because they’ve just become Medicare beneficiaries and thus haven’t paid premiums before.

No increase for them, in other words. Just a substantial deduction from their monthly Social Security checks.

Some Congressional Democrats have pushed for a fix to protected all Medicare beneficiaries from a premium hike. The Obama administration has joined them, though it reportedly would find something less than a total freeze acceptable.

This is not a strict party-line issue. The bipartisan National Governors Association, for example, has urged Congress to find a solution — understandably, since Medicaid programs will otherwise have to pick up extra premium costs.

The National Association of Medicaid Directors has also written Congress — again, not necessarily to protect Medicare beneficiaries, but states. Costs to them, it estimates, will total more than $2.3 billion.

Republicans in Congress may not be averse to a solution. House Speaker John Boehner had huddled with Minority Leader Nancy Pelosi before the kerfuffle over a new speaker made action on anything except (one hopes) the looming debt crisis and soon-to-be-looming government shutdown doubtful.

But both he and Senator Orrin Hatch, who chairs the committee responsible for Medicare, apparently won’t accept a proposal to stave off the premium increase unless the cost is fully offset by savings elsewhere.

An estimated $7.5-$10 billion would do it — chump change for a budget that would total about $3.8 trillion in the Republicans’ plan.

But Republicans already have to come up with savings — or some budget gimmick — to offset the costs of replenishing the Highway Trust Fund, since they won’t raise the gas tax.

And their leaders almost surely can’t get a budget for this fiscal year through both the House and Senate unless they and their Democratic counterparts agree to eliminate — or at least, suspend — the cap on non-defense spending.

That too will send everyone scurrying for an offset. So as we lurch from crisis to crisis, averting the Part B premium hike could become another of those things that ought to get done, but doesn’t.

Or it might get rolled into some massive, last-minute package. Hard to predict. But we know that some low-income seniors and younger people with disabilities will have a harder time making ends meet if Congress doesn’t protect them PDQ.



2 Responses to Medicare Premium Spike Will Hit Some Low-Income People … and All States

  1. […] for one additional year, while at the same time slowing down and spreading out hikes to the premiums people on certain parts of Medicare have to pay. Other details include repealing an ObamaCare […]

  2. […] Medicare Part B premium spike I blogged on last week won’t occur. Well-off seniors will, as always, have to pay more for the outpatient […]

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