Q: Regarding higher Part B premiums for those with higher income as you reported in the March 2006 issue of this newsletter. I think that the proposed higher premiums for those of us with higher incomes are quite reasonable. A person or couple with the incomes listed in the table are quite able to pay the higher premiums and it obviously would help to defray some of the costs. What does TSCL support as an alternative?
A: Millions of higher income seniors will pay substantially more for their Medicare Part B premiums next year as the government begins "income relating," or means testing. Currently beneficiaries pay 25% of the total Part B premium and the government pays the other 75%. In 2006 that works out to be $88.50 per month for beneficiary, and $265.50 per month for the government, making a total cost per person of $354.00 per month.
Sign TSCL's Petition Opposing Means Testing for Medicare Premiums!
The amount the government pays, which some policy makers call a "government subsidy," will change in 2007 as the government cuts its portion of the premium "subsidy." Beneficiaries with incomes higher than $80,000 will pay a higher percentage of the total cost. To see an updated chart of estimated premiums click here: Estimated Part B Premiums 2007 - 2009 As Means Testing Begins
Although the income levels may appear to be reasonable to you today, the camel's nose is now in the tent. Premiums are not likely to be so reasonable in the not-too-distant future. According to Congressional Budget Office estimates, at the current income levels, means testing the Part B premium would only save about $13 billion over ten years. That's less than three tenths of one percent of what Medicare is estimated to spend over the same period. TSCL is therefore concerned that, in order to create greater savings, Congress will expand means testing by lowering income levels and/or removing the annual inflation adjustment as President Bush proposed earlier this year in his 2007 budget. More middle-income seniors would thus be affected.
In addition, many "higher income" beneficiaries may not agree that they should bear more of Medicare's costs considering they paid more Medicare taxes than other workers over their working careers. Unlike Social Security, which restricts payroll taxes to a maximum earnings amount ($94,200 in 2006), workers pay Medicare taxes on the entire amount of their earnings. It's a grim fact that even the well-to-do can be impoverished by long-term catastrophic health care costs.
Simply shifting more costs to beneficiaries does not solve the root problem of slowing the escalation of health care costs. TSCL recently commissioned an in-depth study of Medicare cost-savings measures and is in the process of reviewing a number of proposals to ensure greater solvency for the program.
June 2006
