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 The Medicare population vulnerable to shouldering the larger premium
includes some federal and state government employees, people who
sign up for Medicare for the first time next year, low-income
seniors whose premiums are paid by state Medicaid plans and
high-income seniors who already pay premium surcharges.
For these 16.5 million enrollees facing the stiff increase, monthly
premiums would rise to $159.30 from $104.90, according to the recent
annual report of the Medicare trustees (http://reut.rs/1MPkYeN).
Meanwhile, 36 million Medicare Part B enrollees would have their
premiums hold steady at $104.90 because increases are tied to Social
Security cost-of-living adjustments as part of a "hold harmless
provision" in the Social Security Act. Because no COLA is expected
next year due to extraordinarily low inflation this year, the Part B
premium will stay flat.
Some costs will go up for almost everyone, however, as trustees
forecast a big increase in the Medicare Part B deductible, to $223
from $147, with the exception of those who have first-dollar Medigap
supplemental policies and Medicare Advantage plan enrollees.
WHAT CAN BE DONE
Advocates for the 30 percent are swinging into action, trying to
convince Congress to pass a one-time fix that would hold off on cost
of living increases for everyone. Legislation that extended the hold
harmless provision to those not covered by it passed the House of
Representatives when a similar situation occurred in 2009, but never
received a vote in the Senate.
This time, the fix is being pushed by a broad coalition of advocates
and organizations representing federal and state government workers.
No official figures are available, but a back-of-the-envelope
calculation suggests a fix would cost the federal government $10
billion.
"It's not an ideal situation from anyone's perspective," says
Juliette Cubanski, associate director of the Program on Medicare
Policy at the Kaiser Family Foundation. "People on Social Security
would much rather have a COLA, and the Medicare actuaries would much
rather spread around the cost increases evenly."
The 2016 premiums are not locked in until October, so there is still
time to change course. The Part B premium is based on the program's
estimate of how much they need to run the program, plus a cushion
for unexpected costs, Cubanski explains. "Medicare could opt for a
smaller reserve, which could bring the premium down a bit."
Politicians are not likely to ride to the rescue of well-off
seniors, who will bear some of this expected price increase. But
half of Medicare beneficiaries have an income of $24,000 or less,
according to Kaiser. Price increases will hit them hardest.
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Among the middle-income seniors likely to be affected are federal
retirees covered by the Civil Service Retirement System - the
government's legacy defined benefit pension system.
These retirees did not participate in Social Security during their
time in the federal workforce (federal workers hired since 1987 have
participated in the newer defined benefit Federal Employees
Retirement System, and they receive Social Security.)
This also applies to state government employees, most of whom
participate in defined-benefit pension plans and are not covered by
Social Security during their tenure as state employees.
Another big area of worry: low-income "dual-eligible" seniors who
receive Social Security and also participate in both Medicare and
state-run Medicaid programs.
Although this group is not covered by the "hold harmless" provision,
states pick up the tab for the higher cost, putting additional
pressure on already-stressed state Medicaid budgets.
"We're very concerned about state Medicaid budgets, and how they
would handle the increase," says Andrew Scholnick, senior
legislative representative at AARP.
Although Congress has a busy fall schedule, lawmakers are showing
interest in taking action to mitigate the impact. "I think it's is
going to come to the forefront a bit more now," says Scholnick.
But he doubts Congress will act before October, leaving the door
open to a last minute fix before year-end.
(Editing by Beth Pinsker and Alan Crosby)
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