Office of Management and Budget
September 2011
Health Savings
Increase income-related premiums under Medicare Parts B and D.
Under Medicare Parts B and D, certain beneficiaries pay higher premiums as a result of their higher levels of income. Beginning in 2017, the Administration proposes to increase income-related premiums under Medicare Parts B and D by 15 percent and maintain the income thresholds associated with income-related premiums until 25 percent of beneficiaries under Parts B and D are subject to these premiums. This will help improve the financial stability of the Medicare program by reducing the Federal subsidy of Medicare costs for those beneficiaries who can most afford them.
Modify Part B deductible for new beneficiaries.
Beneficiaries who are enrolled in Medicare Part B are required to pay an annual deductible. This deductible helps to share responsibility for payment of Medicare services between Medicare and beneficiaries. To strengthen program financing and encourage beneficiaries to seek high-value health care services, the Administration proposes to apply a $25 increase in the Part B deductible in 2017, 2019, and 2021 for new beneficiaries. Current beneficiaries or near retirees would not be subject to the revised deductible.
Introduce home health co-payments for new beneficiaries.
Medicare beneficiaries currently do not make co-payments for Medicare home health services. This proposal would create a home health copayment of $100 per home health episode, applicable for episodes with five or more visits not preceded by a hospital or other inpatient post-acute care stay. This would apply to new beneficiaries beginning in 2017.
Introduce a Part B premium surcharge for new beneficiaries that purchase near first-dollar Medigap coverage.
Medigap policies sold by private insurance companies provide beneficiaries additional support for covering healthcare costs by covering most or all of the cost sharing Medicare requires. This protection, however, gives individuals less incentive to consider the costs of health care services and thus raises Medicare costs and Part B premiums. Of particular concern are Medigap plans that cover substantially all Medicare copayments, including even the modest co-payments for routine care that most beneficiaries can afford to pay out of pocket. To encourage more efficient health care choices, the Administration proposes a Part B premium surcharge equivalent to about 15 percent of the average Medigap premium (or about 30 percent of the Part B premium) for new beneficiaries that purchase Medigap policies with particularly low cost-sharing requirements, starting in 2017. Current beneficiaries and near-retirees would not be subject to the surcharge.
http://www.whitehouse.gov/system/assets/drupal/omb/budget/fy2012/assets/jointcommitteereport.pdf
Comment:
By Don McCanne, MD
Having been burned repeatedly in negotiations with the Republicans, and fully aware of that the election season has already begun, President Obama stepped away from conducting negotiations over in their territory and has now released his own list of policies not tainted by compromise. Since there is no hope of passing this intact in the current Congress, releasing this proposal obviously was a political maneuver. Nevertheless, it is important to see where he stands on Medicare, if only he could have his way.
Although he had been in discussions on raising the Medicare eligibility age to 67, it is a relief to see that this is absent from his wish list. Also there is not even a hint that he might consider a privatization scheme such as the Republican premium support/voucher program. So what is in his proposal?
He would increase both Medicare Part B (physician) and Part D (drug) premiums for higher-income individuals and expand the number of beneficiaries who would be subject to these higher premiums. It is entirely appropriate for higher-income individuals to contribute more in taxes to the funding of Medicare, but once individuals are in the program they should all be treated the same. Requiring higher payments for higher-income individuals reduces their support for the traditional program and increases the political pressure to privatize. If more money is needed from higher-income Medicare beneficiaries then it should be collected through progressive income taxes and not through income-indexed premiums.
He would increase Part B deductibles for younger Medicare beneficiaries, but not for those already in the program. Just as assigning different premiums based on income decreases solidarity, the assignment of different deductibles based on age also takes a toll on solidarity.
Introducing co-payments for Medicare home health services shifts costs from the government to Medicare beneficiaries. In fact, new co-payments, higher premiums, and larger deductibles all expand the cost burden for beneficiaries, which can have the detrimental impact of impairing access.
Medicare already is a program with inadequate coverage that leaves patients with excessive out-of-pocket costs. The costs can be high enough such that Medicare beneficiaries have not been immune to personal bankruptcy associated with medical debt. Several previous Quote of the Day messages have shown that cost sharing has only a negligible impact in reducing our national health expenditures, yet it often does cause financial hardship and can impair access.
The proposal to introduce a Part B surcharge for individuals purchasing Medigap plans is yet another means of shifting more costs to the patient. It is designed to discourage patients from buying Medigap plans that would significantly reduce the burden of cost sharing. Instead of increasing cost sharing, the financial burden should be reduced by folding Medigap benefits into the traditional Medicare program.
Even though President Obama and his handlers are trying to create an image that he is standing firm for middle-income Americans and against the right wing anti-government extremists, on Medicare he is actually moving to the right! He has violated the first rule of negotiation. You never compromise any of your basic policy positions before you begin.
Where should he have begun? He should have eliminated all cost sharing in Medicare, converted the financing infrastructure into a single payer system, and then moved the eligibility age to birth. But no. Free of the bonds of the right wing extortion, he drifted to the right anyway.