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Medicare Premium Estimated to Rise Five Times Faster Than COLA (Press Release)
Alexandria, VA (April 24, 2003)--Medicare recipients face the largest premium increase in 11 years next year. According to Medicare's chief actuary, the Medicare premium is expected to rise to $66 per month, an increase of $7.30 or 12.4% over the 2003 premium of $58.70. (1) "A Medicare premium increase of this magnitude would swallow most, if not all, of many seniors' Cost-Of-Living Adjustment (COLA)," warns George Smith, Chairman of TREA Senior Citizens League (TSCL). "The 12.4% Medicare premium increase is 5 times higher than the estimated increase seniors will receive in their Social Security benefits," Smith says. Recently the Social Security Trustees estimated that the COLA effective on January 1, 2004 would be 2.3%.(2) "We hear from seniors across the nation who are losing the race with the rapid rise of health care costs," says Smith. One TSCL member, Ruby Peters, wrote, "I will net a 5 cents a month increase in my Social Security benefits in 2003 after the $4.70 deduction for the Medicare premium increase and an $8.25 increase in my supplemental insurance." Despite the record-setting rate increases in health care costs, senior COLAs have remained at near-record lows. The COLA effective in January of 2003 was 1.4% despite a 17% jump in Medigap and Medicare HMO health insurance premiums and corresponding rise in prescription drug costs. (3) "The reason senior COLAs are so low," explains Smith, " is the fact that the government bases the annual increase on the rise in the market basket of younger workers. The COLA does not accurately reflect the proportion of health care goods and services upon which seniors must spend a greater share of their income. Smith says that seniors would receive a more fair COLA if it were calculated using a "seniors only" Consumer Price Index, the Consumer Price Index for the Elderly (CPI-E). According to an on-going study by TSCL, the CPI-E rises about 15% more quickly than the currently used CPI. "A person who retired in 1984 with an average benefit of about $460 would receive about $808 per month today. Had their benefits been adjusted using the CPI-E, however, that person would receive $867 or $59 per month more," (4) Smith notes. "We urge seniors to write to their Members of Congress and ask them to support legislation that would provide a more fair COLA by using the CPI-E to calculate the annual increase." TSCL is a national group of politically active seniors concerned about the protection of their earned Social Security, Medicare, military, and other retirement benefits. TSCL members participate in a number of grassroots lobbying and public education campaigns designed to ensure governmental bodies, including the Social Security Administration and the Centers for Medicare and Medicaid Services, live up to their commitments. For more free information on this issue and our organization, please contact TREA Senior Citizens League, Department S605Y, 909 N. Washington St., Suite 300, Alexandria, VA 22314, or visit our website at: www.tscl.org. (1) Medicare Recipients Face 12.4% Rise in Premiums, Robert Pear, The New York Times, March 26, 2003. May 2003 | ||||||||
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