Medicare Crisis Averted?

It’s not that often that you get good news about insurance premiums. However, millions of Medicare B recipients who had been worrying about a potential 52% premium increase were likely heartened to hear about a bipartisan bill just approved by Congress. The House approved the deal in a 226-167 vote Wednesday, October 28 with 79 Republicans and 187 Democrats supporting the plan. The Senate approved the deal Friday, October 30 around 3:00 AM in a 64-35 vote and sent it to President Obama for his signature.

Medicare Part B covers most medically necessary doctors’ services, preventive care, durable medical equipment, outpatient services, lab tests, X-rays, mental health care and some home health and ambulance services. Rate increases are tied to Social Security’s cost-of-living adjustment (COLA). As Robert Powell recently discussed in an article for USA Today, rate increases for the program are capped by law to the amount of the Social Security cost-of-living adjustment (COLA). The issue of such a large increase for 2016 first surfaced on October 15th when the government announced there would be no COLA in 2016. Therefore, because 70% of Medicare beneficiaries would be, by law, protected from an increase, that left the large increase to be divided among the remaining 30% of Medicare B beneficiaries who don’t yet collect Social Security or who may be subject to the income-related premium adjustment.

Specifically, without the measure just passed by Congress, that 30% of the 54 million Medicare population stood to have seen their Part B premiums increase 52% next year, from a base rate $104.90 per month to $159.30. Instead, the measure awaiting President Obama’s signature results in these 17 million beneficiaries getting just a 14% increase in their premiums. The new base rate for this group would increase to $120 per month in 2016, plus a $3-per-month surcharge. Anyone subject to Medicare’s income-related monthly adjustment amount will pay more than $120, but those figures have yet to be released.

AARP, representing the interests of some 38 million Americans 50 and older, was among the first to endorse proposed legislation and push for its support in the Senate. “Congress is helping to prevent financial hardship for many beneficiaries at a time when there is no Social Security cost-of-living adjustment,” Jo Ann Jenkins, chief executive officer of AARP, wrote in a letter to the Senate and House leadership. And David Certner, legal counsel and legislative policy director for AARP Government Affairs added, “It didn’t really make sense that 30% who are not held harmless to pick up the entire cost of that and to have big spikes in their premiums, particularly since some of them could be low-income people.”

The price tag for the bill that is likely to become law is approximately $12 billion and is to be covered by a Treasury loan and paid back over time by a gradual increase in Medicare Part B premiums.

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