Bush Administration Pushes Proposal To Increase Premiums, Deductibles For Higher-Income Medicare Drug Plan Beneficiaries

Main Category: Medicare / Medicaid / SCHIP
Article Date: 08 Oct 2007 - 11:00 PDT

email to a friend   printer friendly   view / write opinions

CMS officials on Thursday announced plans to advance a "means testing" proposal that would require higher-income Medicare beneficiaries to pay higher premiums and deductibles under the Medicare prescription drug benefit, the Washington Post reports.

The proposal, which CMS first drafted as part of the fiscal year 2008 budget plan that President Bush announced in February, died earlier this year without much attention. However, at the request of Sen. John Ensign (R-Nev.), CMS has revived the proposal, which Ensign seeks to attach to future legislation.

Currently, only Medicare Part B, which covers physician visits and outpatient hospital care, includes means testing. Higher-income Medicare beneficiaries -- those with annual incomes that exceed $82,000 for individuals or $164,000 for couples -- pay higher premiums under Medicare Part B on a sliding scale, and those thresholds increase annually with inflation. The original proposal would have frozen those thresholds and applied them to the Medicare prescription drug benefit. The new proposal likely would not freeze those thresholds.

According to the White House Office of Management and Budget, the original proposal over five years would have saved $7.1 billion under Medicare Part B and $3.2 billion under the prescription drug benefit. Ensign said that the original proposal would have affected only 4.3% of Medicare beneficiaries.

Ensign said, "Working couples with incomes over $160,000 should not be subsidized by retired firefighters or schoolteachers. They should pay more of their share" adding, "I will be looking constantly for ways to put this before the Senate."

Reaction
According to the Post, some Republican and Democratic lawmakers, who seek to address the "looming crisis" in the financial stability of Medicare and other entitlement programs, likely will support the proposal, but, in the past, "similar proposals have been blocked by the furious response of seniors."

Rep. Jim Cooper (D-Tenn.) said, "Means testing is going to be a necessary part of all our entitlement programs," adding, "We simply cannot afford the promises we've made."

Ron Pollack, executive director of Families USA, said that "having premiums established based on ability to pay makes sense," provided that the thresholds increase annually with inflation, CMS does more to help low-income Medicare beneficiaries and higher-income beneficiaries do not leave the program.

However, senior advocacy groups questioned "how a new surcharge would work in such a sprawling, diverse system" as the Medicare prescription drug benefit, which private health insurers, rather than CMS, administer, the Post reports.

John Rother, policy director for AARP, added, "You say it saves money and these people can afford it, but it also eats away at the incomes of seniors. It erodes their sense of the reliability on these federal programs, and it certainly erodes political support" (Weisman, Washington Post, 10/5).

Reprinted with kind permission from http://www.kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, or sign up for email delivery at http://www.kaisernetwork.org/dailyreports/healthpolicy. The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation© 2005 Advisory Board Company and Kaiser Family Foundation. All rights reserved.