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Medicare Cost Spike Prompts Democratic Concern

By Adriel Bettelheim and Rebecca Adams, CQ Roll Call

October 7, 2015 -- House and Senate Democrats are rallying to block a sharp increase in 2016 Medicare premiums for doctor visits and outpatient services that would affect more than 15 million beneficiaries and is due to be announced soon.

The price spike, which had been anticipated since this summer, comes as the health program for the elderly and disabled grapples with rising costs of outpatient care and prescription drugs. The pressure point is Medicare Part B, which pays for doctor office visits, preventive services, drugs and other care delivered outside a hospital and requires beneficiaries to pay a portion of the cost.

“It’s very personal to the lives of America’s seniors and others who depend on Medicare,” said House Democratic Leader Nancy Pelosi of California on Wednesday.

Across the Capitol, Ron Wyden of Oregon, the top Democrat on the Senate Finance Committee, introduced legislation he said would block a projected 52 percent increase in monthly premiums for roughly 30 percent of Medicare beneficiaries. The increase would fall primarily on higher-income seniors, new Medicare enrollees and those who don’t collect Social Security benefits. Wyden said his measure would keep monthly premiums for this cohort at 2015 levels of $104.90 and deductibles for all beneficiaries at the current threshold of $147.

The Department of Health and Human Services is set to announce 2016 Part B premiums this month. In July, Secretary Sylvia Mathews Burwell said 70 percent of enrollees won’t see a change in their expenses, and that the size of increases for the remainder would be subject to cost projections, additional data and “the administration’s considerations.”

Most Medicare beneficiaries are insulated from sharp cost increases by a “hold harmless” provision that ensures the dollar increase in the Part B premium cannot exceed the increase in a beneficiary’s monthly Social Security benefit. Because of the low inflation rate, Social Security’s cost-of-living adjustment is expected to be zero next year, which has the effect of shifting all cost increases onto those Medicare beneficiaries not covered by the hold harmless language.

States have a stake in the outcome, because two-thirds of the excluded group are poorer seniors who qualify for both Medicare and Medicaid, the federal-state health program for the poor. State Medicaid programs are responsible for picking up any premium hikes for their beneficiaries and could be forced to scale back services as a result, Wyden said.

Championing a change could help Democrats curry favor with politically-active seniors.

“Every single American who receives Medicare earned it,” said Democratic Caucus Chairman Xavier Becerra of California.

But budget hawks said if Congress blocks the increases, lawmakers should find offsets so the costs do not add to the deficit.

“Congress certainly has a full plate these next few months, between the need to address highway funding, sequester caps, the debt ceiling, tax extenders, and now this premium spike,” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget. “As we address these issues, we can’t keep charging the costs to our credit card, and we especially shouldn’t be increasing high and rapidly growing Medicare costs. Congress and the President need to pay for any premium relief, and preferably in a way that actually helps to slow future health care cost growth.”

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