Millions Face a 50 % Medicare Premium Hike If Obama and Congress Don’t Act
Policy + Politics

Millions Face a 50 % Medicare Premium Hike If Obama and Congress Don’t Act

iStockphoto/The Fiscal Times

Under mounting pressure from seniors and labor groups, congressional leaders and the Obama administration are rushing to find a way to avert a huge Medicare premium increase of 50 percent or more for nearly a third of the 50 million elderly Americans who are reliant on Medicare for their physician care and other health services.

House Speaker John Boehner (R-OH), House Minority Leader Nancy Pelosi (D-CA) and White House officials have been scrambling behind the scenes to spare millions of seniors the expense of huge Medicare Part B premium hikes. While the problem pales in comparison to the larger budget issues, including highway spending and debt ceiling challenges, lawmakers are super sensitive to the concerns of seniors heading into the crucial 2016 election year.

Related: Millions Facing a Hefty Increase in Medicare Premiums in 2016

“Congress has a responsibility to act,” Pelosi said in a statement this week. “If we do nothing, millions of American seniors will suffer. Democrats continue to press the Republican leadership to bring a fix to the floor so we can prevent the serious harm this increase will have on states and low-income seniors across the country.”

Some 70 national organizations, including AARP, labor groups and health insurance company trade associations, sent a letter to Republican and Democratic congressional leaders last week urging prompt action to block or mitigate the looming premium increases. “Older adults and people with disabilities cannot shoulder these unprecedented increases,” Joe Baker, president of the Medicare Rights Center, told The New York Times. 

The pending sharp premium increase, reported in August by The Fiscal Times, was prompted by a strange twist in the law that effectively penalizes wealthier beneficiaries and others any time the Social Security Administration fails to approve an annual cost of living adjustment. This will be only the third time since 1975 that Social Security will not increase the cost of living benefit, simply because the Consumer Price Index used by the government has remained relatively flat.

Medicare Part B and the Social Security trust fund are intertwined, and most seniors on Medicare have their monthly premiums deducted from their Social Security checks. Because the federal law for various reasons “holds harmless” about 70 percent of Medicare recipients from premium increases to cover unexpected rising healthcare costs, the remaining 30 percent of Medicare Part B beneficiaries suffer the consequences by being made to pay higher premiums.

Related: Congress’ Medicare ‘Fix’ Could Leave Seniors Paying More

Medicare officials are expected to announce a final decision on 2016 premiums later this month after reviewing federal Bureau of Labor Statistics data on consumer prices. However, many are assuming the premiums will go up.

Short of congressional or Department of Health and Human Services intervention at this point, roughly 15 million seniors, first-time beneficiaries or those currently claiming both Medicare and Medicaid coverage will see their premiums jump from $104.90 per month to $159.30 for individuals, according to an analysis by the Center for Retirement Research at Boston College. Higher-income couples would pay multiples of that increase.

Related: Battle Lines Form in the Fight Over Social Security Payment Reductions

The cost to Congress of averting such a premium hike is substantial – ranging from $2.8 billion to $7.5 billion, depending on calculations and budgetary baselines used in the computations. An aide to Boehner said on Tuesday that the speaker – who retires from Congress at the end of the month and is trying to complete a lot of budget business – is insisting that the cost of the bailout be offset by cuts in other programs.

Pelosi had urged Boehner to include the funding in the short-term continuing resolution approved late last month that will keep the government operating through December 11, according to a source. Now she is pressing him for a stand-alone bill to pass this week before the premium increase is likely to take effect. According to an aide, the longer Congress takes to act, the more expensive it becomes.

Pelosi has scheduled a press conference with other Democratic leaders on Wednesday to call on Boehner and House Republicans “to take urgent action to keep Medicare Part B premiums and deductibles affordable for millions of America’s seniors.”