50,000 Seniors Predicted to Abandon Medicare for Private Insurance in 2007, Leaving System Burdened with Nation's Oldest and Sickest
September 6, 2006 (Washington, DC) - The Department of Health and Human Services (HHS) will announce Medicare Part B premiums for 2007 later this month, which will increase significantly for all seniors and dramatically for seniors with incomes of more than $80,000 per year. Excluded from their announcement will be the fact that some seniors will see their premiums jump by as much as 450 percent in just over two years.
For the first time since Medicare's creation 41 years ago, Medicare Part B – which covers doctors' visits, tests, and outpatient hospital care – will be "means tested," meaning seniors with incomes of more than $80,000 per year will pay more for services than lower-income seniors. As many as 2.3 million seniors will be affected by means testing.
Although HHS will only release figures for 2007, TREA Senior Citizens League is estimating that the cost of premiums will almost double by 2009 for beneficiaries with incomes of $80,000 each year, from $88.50 a month today to an estimated $172.80 per month in 2009.
Seniors with incomes of $200,000 will see premiums skyrocket by close to 450 percent in fewer than 2½ years – from $88.50 a month today to an estimated $395 per month in 2009. Estimates are based on the average annual increase over the past five years.
"At first glance, it may seem fair to salvage a failing system by having the wealthy carry a larger share of the load," said Shannon Benton, Executive Director of TREA Senior Citizens League. "But as wealthy seniors abandon Medicare as it becomes more expensive and choose private insurance instead, only the poorest and sickest will be stuck in Medicare, driving up costs for everyone left behind."
According to the Centers for Medicare and Medicaid Services, an estimated 50,000 seniors are expected to drop their Medicare Part B coverage next year when their premiums begin to rise – a number expected to increase in future years – opting instead for private insurance. Those seniors tend to be the ones without preexisting health problems, since they have fewer problems switching health plans. They also tend to have an easier time affording private insurance out-of-pocket.
Seniors earning less than $80,000 per year will see their Medicare Part B premiums jump from $88.50 a month today to at least $98.40 a month next year, an 11 percent increase – far greater than their annual Social Security cost of living increase, which has averaged less than three percent over the past five years.
Note: The following chart is subject to slight change.
Estimated Part B Premiums 2007 - 2009 As Means Testing Begins
Effective January 1, 2007, the government will start determining the Medicare Part B premium based on a person’s income. Assuming that the base Medicare premium continues to grow at the same pace that it has since 2002 (about 11.6% per year) here’s what premiums will be for 2007, and what they may look like for 2008 and 2009 as the government begins “income relating” or Means Testing.
Estimated Part B Premiums Under Means Testing
Income:
Individuals |
Income:
Filing jointly |
Monthly premium
in 2006 |
Monthly premium
in 2007* |
Monthly premium
in 2008** |
Monthly premiu
in 2009** |
| Under $80,000 |
Under $160,000 |
$88.50 |
$93.50** |
$104.30 |
$116.50 |
| $80,000 - $100,00 |
$160,000 - $200,000 |
$88.50 |
$106.00 |
$132.20 |
$163.00 |
| $100,000 - $150,000 |
$200,000 - $300,000 |
$88.50 |
$124.70 |
$173.90 |
$232.90 |
| $150,000 - $200,000 |
$300,000 - $400,000 |
$88.50 |
$143.40 |
$215.60 |
$302.80 |
| Above $200,000 |
Above $400,000 |
$88.50 |
$162.10 |
$271.82 |
$372.60 |
Source: *Medicare Premiums and Deductibles for 2007, Centers for Medicare and Medicaid Services, September 12, 2006.
** Estimates assume annual rate of increase of 11.6%, the average since 2002 (past five years)
The Congressional Budget Office estimates that means testing will save barely three-tenths of one percent of Medicare's total budget over the next ten years.
Conversations between members of Congress and TREA Senior Citizen League representatives suggest that many members are not aware of this law due to the way it was passed. Means testing for Medicare Part B was inserted into the 2003 Medicare Modernization Act (MMA) drug legislation, and was not in either version of the law originally passed by the House and Senate.
TREA Senior Citizens League supports legislation introduced by Congresswoman Nita Lowey, the "Medicare Part B Premium Fairness Act," which would repeal means testing for Medicare Part B.
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With 1.2 million members, TREA Senior Citizens League is one of the nation's largest nonpartisan seniors groups. Located just outside Washington, D.C., its mission is to promote and assist members and supporters, to educate and alert senior citizens about their rights and freedoms as U.S. Citizens, and to protect and defend the benefits senior citizens have earned and paid for. Please visit www.SeniorsLeague.org or call 1-800-333-8725 for more information.
PRESS CONTACT: Brad Phillips, Phillips Media Relations
202-776-0640 (w) 202-446-4060 (c) Brad@PhillipsMediaRelations.com
September 2006
