The Obama administration and congressional leaders have finally reached a tentative budget agreement that will prevent a 52 percent spike in Medicare premiums for millions of Americans.
Without the bipartisan budget deal about 17 million Medicare recipients would see their Medicare Part B premiums soar to about $160 from $104.90, USA Today reports. Instead, those same Medicare beneficiaries, who represent about 30 percent of older Americans covered by Medicare, will see a 14 percent premium increase to $120 a month next year, plus a monthly surcharge of $3.
According to The Washington Post, the 17 million Medicare beneficiaries affected by the premium increase do not have their insurance payment automatically deducted from a Social Security check. “Among this group are people who do not collect Social Security, will be enrolling in Medicare’s Part B next year for the first time, have incomes great enough that they are charged higher premiums, or are poor enough that they also qualify for Medicaid,” the Post said.
The unprecedented spike in Part B rates for the rest would have come about in order to keep the Medicare system in actuarial balance.
A provision of federal law that links Medicare premiums to Social Security benefits, which won’t increase for the third year in a row because of low inflation, is shielding the other 70 percent of Medicare beneficiaries from increased premiums.
“The unprecedented spike in Part B rates for the rest would have come about in order to keep the Medicare system in actuarial balance,” the Post explained.
A loan from the U.S. Treasury to the Medicare trust fund will cover the cost of Medicare Part B in the new budget deal, according to USA Today. The loan will be paid back over the next five years with slight increases ($3 a month) in Medicare premiums.
“The approach to financing … will allow premiums to increase more gradually, while spreading the cost over a longer period of time, and across a broader group of beneficiaries,” Tricia Neuman, senior vice president at the Kaiser Family Foundation, told USA Today.
Medicare Part B covers most health care service outside hospitals.
Although the budget deal wards off a massive increase in Medicare Part B premiums, it does little to address the long-term financial stability of Medicare.
“While we have concerns about the way in which the Part B cost-sharing resolution is paid for, we are glad people who rely on Medicare can breathe a bit easier — knowing their premiums and deductible will not skyrocket next year,” Judith Stein, founder and executive director of the Center for Medicare Advocacy, told USA Today.