Legislation Would Likely Hold Next Year’s Medicare Premiums Steady
September 23rd, 2009 - Congressional Quarterly
By David Clarke, CQ Staff

The House may vote as early as Thursday on a bill that would prevent Medicare premiums from rising sharply for some senior citizens.

The legislation would spare about 11 million Medicare Part B recipients from having to shoulder more than their share of an annual increase because of complexities in federal law governing the premiums.

The bill (HR 3631) would cost $2.8 billion and would be offset by reducing the Medicare Improvement Fund, which the Health and Human Services Department uses to make improvements to Medicare Part A and Part B. It is expected to be considered under suspension of the rules.
Congressional concern with Part B premiums arises from the politically sensitive likelihood that Social Security recipients will not get a cost-of-living adjustment (COLA) in their benefits next year for the first time in 35 years.
At the same time, premiums for Part B, which covers physician services and outpatient care, are expected to rise. Because most seniors have Part B premiums deducted from their monthly Social Security benefit checks, the lack of a COLA next year will mean an effective reduction in Social Security benefits for affected seniors.

However, a “hold harmless” provision in federal law would shield 73 percent of Medicare beneficiaries from having to pay the Part B premium increase if there is no increase in their Social Security benefits.

Under current law, the remaining 27 percent would not only have to shoulder their own Part B premium increases, but they would be allotted a portion of the increased premiums the government can’t collect from seniors who are held harmless.

Those who would be stuck with the bill are low-income seniors who receive benefits from both Medicare and Medicaid; seniors with incomes above $85,000 if they are single and $170,000 for couples; and people who are new to the program. Their monthly premium would rise to $104.20 next year, from $96.40, according to a report by the Kaiser Family Foundation that cited statistics from the Medicare Board of Trustees.

To prevent this, the bill the House is set to consider would extend the hold-harmless provision to all Medicare enrollees so that no Social Security recipients would see their monthly check decreased because of a Part B premium increase, according to a summary from the Ways and Means Committee.

“There is absolutely no reason this burden should fall on seniors and people with disabilities, especially during difficult economic times,” Ways and Means Chairman Charles B. Rangel, D-N.Y., said in a release.

And in 2011 . . . ?

The bill apparently does not address what might happen in 2011, when seniors are again expected to go without a Social Security COLA. The monthly Part B premium would hit $120.20 in 2011 for seniors not in the protected class, according to the Kaiser report.

More broadly, senior citizen groups have been urging Congress to make sure Social Security recipients get some boost in benefits next year, either by passing legislation to adjust the COLA or by providing a one-time payment. No benefit increase is expected otherwise, because inflation has gone down under the formula the government uses to determine payment adjustments.
Several Republicans have criticized the push for an increase, noting seniors received a 5.8 percent COLA last year, the highest since 1982.

There is more urgency to address the Part B premium issue because the Centers for Medicare and Medicaid Services has told Congress it needs data on premium rates in the next few weeks for administrative purposes so that the program can run smoothly, according to a Democratic aide.