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

Armen Hareyan's picture

CMS officialson Thursday announced plans to advance a "means testing" proposal thatwould require higher-income Medicare beneficiaries to pay higherpremiums and deductibles under the Medicare prescription drug benefit,the Washington Post reports.

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

Currently, only Medicare Part B,which covers physician visits and outpatient hospital care, includesmeans testing. Higher-income Medicare beneficiaries -- those withannual incomes that exceed $82,000 for individuals or $164,000 forcouples -- pay higher premiums under Medicare Part B on a slidingscale, and those thresholds increase annually with inflation. Theoriginal proposal would have frozen those thresholds and applied themto the Medicare prescription drug benefit. The new proposal likelywould 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 billionunder Medicare Part B and $3.2 billion under the prescription drugbenefit. Ensign said that the original proposal would have affectedonly 4.3% of Medicare beneficiaries.

Ensign said, "Workingcouples with incomes over $160,000 should not be subsidized by retiredfirefighters or schoolteachers. They should pay more of their share"adding, "I will be looking constantly for ways to put this before theSenate."

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

Rep. Jim Cooper (D-Tenn.) said, "Means testing isgoing 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 makessense," provided that the thresholds increase annually with inflation,CMS does more to help low-income Medicare beneficiaries andhigher-income beneficiaries do not leave the program.

However,senior advocacy groups questioned "how a new surcharge would work insuch a sprawling, diverse system" as the Medicare prescription drugbenefit, 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 italso eats away at the incomes of seniors. It erodes their sense of thereliability on these federal programs, and it certainly erodespolitical support" (Weisman, Washington Post, 10/5).

Reprinted with permission from kaisernetwork.org. Youcan view the entire Kaiser DailyHealth Policy Report, search the archives, and sign up for email deliveryat kaisernetwork.org/email. The Kaiser Daily Health Policy Report is published for kaisernetwork.org, afree service of The Henry J. Kaiser Family Foundation.