Here we have one of those slight of hands that politicians pull on taxpayers. The issue how to pay for a voter aggravating glitch in Medicare without increasing taxes for taxpayers or premiums Medicare recipients (i.e. voters). The Congressional leaders and the Obama Administration have “fixed” the potentially alarming increase in Medicare Part B premiums under the recently-passed government budget deal.
Medicare Part B covers most health care services outside of hospitals, and thus represents one of the biggest expense items in the government-run health system. The program is voluntary, but 91% of all Medicare beneficiaries are enrolled in Part B.
The problem that had to be fixed arose because, under Social Security and Medicare rules, the government is required to collect 25% of all expected Part B costs from recipients each year – in the form of premiums. The total Part B cost was anticipated to reach $171.2 billion 2016.
What gives? Blame the “hold harmless” provision in the law that addresses cost-of-living adjustments (COLA) for Social Security benefits.
That provision says that in years where there is no increase in Social Security benefits – such as next year – Medicare premiums must be held steady for current Social Security recipients. Without this sleight of hand the consequences would have been dramatic:
Premiums for individuals would have increased a jaw-dropping 52% to $159.30 from the current $104.90 per month ($318.60 for married couples). And for individuals whose incomes exceed certain thresholds, premiums could rise to anywhere from $223.00 per month up to $509.80 (or $446 to $1,019.60 for married couples), depending on their incomes.
As a result, of the “hold harmless provision” the entire increase would have had to be borne by enrollees who either don’t yet collect Social Security checks; enrollees with incomes above $85,000 (single) or $170,000 (married); or are dual Medicare-Medicaid beneficiaries. In all, these three categories represent 30% of 2016 Medicare beneficiaries – roughly 7 million Americans. Oh, and by the way, almost all of them vote!
So bring in the people who write legislation for the outgoing Speaker of the House Boehner and President Obama. The new budget deal creates a $12 billion loan from the U.S. Treasury to the Medicare trust fund to reduce the impact on those Medicare participants. Instead of these approximately 7 million likely voters seeing their monthly premiums go up almost 50% per month, they will experience a more modest 14% premium increase, to $120 a month from $104.90 per month next year, plus a monthly surcharge of $3. This will allow premiums to rise more gradually, and spread the cost over a longer period of time.
Thus we saddled 7 million people with a burden of over $1,714 per person that they are paying off for years to come without informing these people or giving them a chance to deal with the burden on a more transparent basis.
Sources:
http://finance.yahoo.com/news/medicare-premium-increases-not-bad-062532254.html
http://www.aarp.org/health/medicare-insurance/info-2015/medicare-part-b-premiums-could-spike.html?intcmp=HP-FLXSLDR-SLIDE1-MAIN
http://www.aarp.org/health/medicare-insurance/info-2015/medicare-part-b-premiums-could-spike.html?intcmp=HP-FLXSLDR-SLIDE1-MAIN
https://www.medicare.gov/your-medicare-costs/part-b-costs/part-b-costs.html
http://www.hhs.gov/about/budget/budget-in-brief/cms/medicare/index.html
http://www.usatoday.com/story/money/columnist/powell/2015/10/07/medicare-part-b-premiums-rise-2016/72621746/
