Pressure Building for Congress to Fix Projected Medicare Part B Premium Spike

Advocates for Medicare enrollees and state Medicaid offices say Congress needs to intervene to prevent an expected 52% spike in Medicare Part B premiums, preferably in enough time to prepare government and household budgets.At a forum Wednesday hosted by the National Coalition on Health Care, advocates like Tricia Neuman, senior vice president at the Kaiser Family Foundation, said most of the options for preventing the increase require congressional action.

That may be difficult with the GOP leading the House and continuing fights over the debt ceiling and budget.

The increase, projected by Medicare actuaries in July, is the result of several factors, mostly involving HHS’ inability to cover increasing drug prices and general health care costs.

The premium payments are linked to Social Security benefits in a way that protects 70% of beneficiaries from having their Part B premiums increase by more than their Social Security payments would rise for cost of living adjustments. But there is not expected to be a bump in Social Security payments next year, meaning those in the 70% will be paying the same premiums.

The 30% who are not protected by a provision called “hold harmless” which ensures Social Security check amounts do not fall from one year to the next because of increases in Medicare Part B premiums would have to shoulder the increases.

HHS Secretary Sylvia Mathews Burwell has some leeway in determining the size of Medicare’s reserves, but they are currently below recommended levels.

Neuman says Congress should consider holding all beneficiaries harmless or decide the 30% should pay the smaller premium that would result if no one was protected and the premium increase would be distributed evenly across all beneficiaries.

Another option would be to change the link between the deductibles and Social Security payments, or to have Medicare, not Medicaid, pay for the premiums of dual eligibles, an estimated 9 million enrollees whose premiums are paid for by state Medicaid budgets. That would amount to an estimated cost of $2.3 billion more across all states next year.

Legislators could also give the secretary more authority to smooth out the spike over time.

The projected increase to a monthly premium of nearly $160 from about $105 would affect 30% of Medicare beneficiaries or 16.5 million people. About 7.5 million of them are new to Medicare, not collecting Social Security checks or have higher incomes.

Sen. Ron Wyden of Oregon and other Democrats have introduced a bill that would keep premiums at 2015 levels for all beneficiaries.

A Democratic Senate aide said the bill is probably too small to move forward on its own but could get tacked on to a must-pass budget deal toward the end of the year. There are ideas on how to pay the bill’s cost, which some have estimated to be at least $7.5 billion, but Democrats aren’t ready to announce specifics yet.

Andrew Scholnick, senior legislative representative for AARP, said he has heard that this issue could become another “doc fix,” a measure that put off cutting doctors’ payments under Medicare and was passed every year until it ended with a reform package in April. AARP has not supported specific legislation but wants to see the premium increase at least softened.

Neuman said people who have delayed Social Security benefits face tough decisions about whether to pay more now or accept a lower lifetime payment.

“People are thinking now about making deals with themselves,” she said.