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Graduated Premiums Are
Being Considered For Medicare Program Millions of elderly people with annual
incomes above $80,000 would be required to pay a greater share of their
Medicare costs under a graduated premium structure being considered by
House-Senate negotiators on the future of the health-care program. The changes would apply to Part B
insurance for physician services and outpatient procedures. Currently, all
elderly pay the same rate -- $58.50 a month in 2003 -- with premiums
adjusted each year to cover 25% of the government's costs. The proposal
would substitute a set of four graduated increases: 35% of the
government's costs for those with incomes between $80,000 and $100,000;
50% for seniors with incomes between $100,000 and $150,000; 65% for those
between $150,000 to $200,000, and 80% for those with incomes exceeding
$200,000. All together, an estimated 2.3 million
Medicare beneficiaries -- 6.6% of the total -- could be affected,
according to estimates by the Congressional Budget Office. This is
significantly more than past plans, and with lawmakers mindful of the
political risks, the higher premiums are unlikely to take effect until
2007 and even then may be phased in over several years. While subject to change, the draft
structure illustrates how negotiators have refined their ideas over time. By expanding their reach, lawmakers stand
to recover more of the government's expenditures for the Part B program,
which is a growing strain on the Treasury. At the same time, the 80% cap
-- which would apply to only about 165,000 seniors -- reflects a consensus
that even the wealthiest should get some subsidy to keep them enrolled in
the program The biggest stumbling block could be
actually administering the proposed premium structure and deciding whether
the Social Security Administration or the Internal Revenue Service will be
responsible. While the IRS has ready access to income
information, Republicans don't want the higher premiums to be seen as a
tax increase. The White House and Republican leadership
are pressing for final decisions this week on the entire overhaul package,
which includes a new $400 billion prescription-drug benefit of huge
political importance to the party in next year's elections. That benefit
would take effect in 2006, which is the reason to postpone any change in
the Part B premium structure until after that date. In the same period, Republicans hope that
new government subsidies will also attract private health plans into the
Medicare market to compete with what is now a government-dominated system.
House conservatives, nervous about the long-term costs, want to use the
private plans as a standard of efficiency to force changes as well in the
traditional government-run fee-for-service Medicare program. House Ways and Means Committee Chairman
Bill Thomas (R., Calif.) has taken to speaking of the provisions as a
"comparative cost adjustment," and has offered to shield
lower-income elderly from any resulting premium increases. But the issue
is highly contentious, and alternative cost-containment options are being
considered. White House Budget Director Josh Bolten
joined negotiations Monday, and the administration is pressing to merge
the trust fund for the Part B program with that for Part A, which covers
hospital costs and is paid for from payroll taxes. At the same time, the White House is
beginning to raise President Bush's profile in the overhaul effort.
Senior-citizen groups have been invited to a White House discussion and
Rose Garden event Wednesday when Mr. Bush is to speak on the legislation Copyright
© 2002 Global Action on Aging |
