Some Medicare benefit cuts, increasing premiums could create 'political nightmare'

Sep 23 2009

News outlets examine Medicare costs and long-term financing while the budget chief contradicts the president's repeated claim that seniors wouldn't see their Medicare benefits cut under health care reform.

The Associated Press reports: "The head of the nonpartisan Congressional Budget Office, Douglas Elmendorf, told senators that seniors in Medicare's managed care plans could see reduced benefits under a bill in the Finance Committee."

"The bill would cut payments to the Medicare Advantage plans by more than $100 billion over 10 years. Elmendorf said the changes "would reduce the extra benefits that would be made available to beneficiaries through Medicare Advantage plans. Finance Committee aides emphasized that core Medicare benefits wouldn't be cut because the plans are required to offer the benefits available under traditional Medicare fee-for-service coverage. ... Federal subsidies to private Medicare plans average about 14 percent higher than those involved in fee-for-service coverage. The health care bills pending in Congress would reduce or eliminate the difference in part by introducing a competitive bidding system to pay the plans. The private plans cover around 25 percent of Medicare beneficiaries. The Finance Committee bill along with other health care legislation in Congress would cut around $500 billion in projected Medicare payments to providers over a decade, including around $125 billion from Medicare Advantage" (Werner, 9/22).

Related KHN story: Democrats Target Federal Subsidies For Medicare's Private Plans  (Galewitz, 9/9)

Politico reports: "Low inflation and the twists of Medicare law are creating a political nightmare for Congress: millions of elderly left with higher Part B premiums and no annual cost-of-living increase from Social Security. ... Annual cost-of-living adjustments for Social Security recipients have been a way of life for decades, but with the bad economy, the consumer price index for 2009 has fallen into negative territory, all but ruling out any benefit increase next year. At the same time, Part B premiums, which cover the cost of physician services, will grow, triggering a set of provisions in Medicare law that protect about three-quarters of the elderly but then ask the remainder to take a double whammy."

"As now forecast, Part B premiums are slated to grow by about 7 percent, from $96.40 to $103 per month. Under normal circumstances, the COLA would help offset this increase, but without the COLA, most of the elderly won't pay the increase, meaning those who do will be asked to pay more. Preliminary numbers indicate this could mean Part B premiums as high as $110 to $120 a month, a better than 14 percent increase — effectively cutting into the Social Security checks for these recipients. A big chunk of them are the poorest elderly, already reliant on Medicaid to help pay their bills; the end result of this burden falls on states, already struggling with budget shortfalls" (Rogers, 9/22).

As part of the series "Are you covered?," NPR and Kaiser Health News report on Medicare and the experience of one beneficiary, Audrey Bernfield: "many of the nation's most satisfied health care consumers are recipients of an existing government health plan: Medicare. Audrey Bernfield is one of those very happy customers" (Rovner, 9/22).

Kaiser Health News and NPR note concerns about Medicare's sustainability and includes an explainer piece on Medicare and how the program may be affected by health care reform (Marcy, 9/22).

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