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Archive for Sunday, September 10, 2006

Affluent seniors soon will pay more for Medicare benefits

September 10, 2006

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— After 41 years of charging most older Americans the same price for the same care, Medicare will require affluent seniors to pay higher monthly premiums for coverage of doctors' visits, diagnostic tests and outpatient hospital care beginning in 2007.

A little-known provision of the 2003 Medicare Modernization Act calls for an estimated 1.5 million seniors to face premium increases ranging from 10 percent to 55 percent in the next three years if they earn at least $80,000 a year or $160,000 for married couples. Seniors who earn more than $200,000 and couples with incomes of more than $400,000 will see their so-called "Part B" premiums rise the most.

The move, designed to help shore up Medicare's shaky finances, has enraged many because it was adopted without public debate. A Republican-led conference committee added the measure to the Medicare bill even though neither the House of Representatives nor the Senate version contained it.

Medicare, the national health plan for the elderly and people with disabilities, faces an uncertain future because of rising health care costs, a growing number of beneficiaries who utilize more services and a dwindling tax base to support the program.

The premium increases are expected to boost revenue by about $7.7 billion from 2007 to 2011, and $20.8 billion from 2007 to 2016.

The 2007 "Medicare and You" handbook, which will be mailed to all beneficiaries in October, will explain the changes. The Social Security Administration will mail out reminders in November.

Outgoing Medicare Administrator Mark McClellan said that gradually increasing the share that high-income beneficiaries paid was necessary to sustain the program.

"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," he said.

Senior advocacy groups such as AARP, the Medicare Rights Center and the Senior Citizens League oppose the change. They say high-income beneficiaries paid more into Medicare during their working lives and shouldn't have to pay more now. They also argue that the higher rates will dissuade seniors from seeking jobs.

Even more troubling, they say, is that Congress increased the premiums without public debate.

"This was slipped in in the dead of night behind closed doors," said Robert Hayes, the director of the Medicare Rights Center.

Others worry that the new premiums could lead healthier, wealthier seniors to depart the Part B program, leading to higher costs for those who remain. "With fewer people in it, the price has to go up to sustain the system," said Shannon Benton, the executive director of the Senior Citizens League. "Our fear is it will increase premiums for even the lower-income people."

McClellan said the added expense could cause up to 50,000 seniors to leave the program next year and even more after that.

But he said their exodus wouldn't alter the program's risk pool enough to increase the cost of coverage dramatically.

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