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House Passes Bill to Avert Medicare Premium Increase

By David Clarke, CQ Staff

September 24, 2009 -- The House on Thursday passed a bill that would prevent Medicare premiums from rising sharply for some senior citizens.

The vote was 406–18.

The legislation (HR 3631) would prevent about 11 million Medicare Part B recipients from having to shoulder more than their share of an annual premium increase because of complexities in federal law and the likelihood that Social Security recipients won't get a bump in their benefits next year to cover the cost of the premium increase.

"I have a hundred thousand Social Security recipients in my congressional district, many of whom will be impacted by the increase in the Medicare Part B premiums next year since this increase is not going to be offset by the normal cost-of- living increase in their Social Security checks," said Rep. Shelley Berkley, D-Nev. "I think this is a very important way and a very necessary way of helping to keep my seniors who rely on Social Security and who will be harmed with this additional payment ... whole."

But House Majority Leader Steny H. Hoyer, one of the few lawmakers to speak out against the legislation, said most seniors, including the poorest, would be protected for the premium increase even if Congress didn't intervene.

"I don't know how many of you go to sleep at night worried about whether Ross Perot can pay his premium, but this will freeze Ross Perot's basic premium from going up. I think that as well-meaning as this legislation is, it is not about poor seniors," the Maryland Democrat said, adding that Congress had to start exercising some fiscal discipline to ensure programs like Medicare can continue to serve those most in need.

Politically, the legislation would spare Democrats from having Medicare premiums climb sharply for new enrollees and seniors with incomes above $85,000 ($170,000 for couples) as they put together an overhaul of the health care system that has some seniors deeply worried.

Indeed, Republicans repeatedly spoke out against the health care overhaul as the Medicare legislation was being debated.

"The majority wants you to think we're here today to help seniors," said Rep. Wally Herger, R-Calif. "This will help some seniors and I intend to vote for it. But seniors shouldn't sleep well tonight, for they're facing massive cuts in Medicare [under] legislation proposed by the president."

Democrats hotly dispute that charge, insisting Medicare recipients will not be hurt by the overhaul.

The Senate is expected to act on the premium bill soon.

The bill 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.

Tied to Social Security

The anomaly involving Part B premiums arises from the 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.

Only a minority of seniors would be affected, but that still adds up to millions of people.

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, however, 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 between $110 and $120 per next year, from $96.40, according to the House Ways and Means Committee.

To prevent this, the bill the House passed 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.

The bill apparently does not address what might happen in 2011, when seniors are again expected to go without a Social Security COLA. 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.

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