Medicare Costs Too High? Three Medicare Proposals That Would Make You Pay Even More

Medicare Costs Too High? Three Medicare Proposals That Would Make You Pay Even More

Alexandria, VA (April 5, 2011) Congress is considering three major deficit reduction proposals that would make seniors pay even more for their Medicare than they do now.  The debate over federal spending on Medicare is occurring at the same time a majority of seniors are reporting higher out-of-pocket Medicare costs, according to a new survey by The Senior Citizens League (TSCL), one of the nation's largest nonpartisan seniors groups.  Retirees received no annual cost-of-living adjustment (COLA) in both 2010 and 2011, leaving them with less Social Security income to cover much higher monthly bills.  About 47 percent of respondents report receiving lower Social Security payments this year, and more than 60 percent said their overall monthly expenses had increased $80 or more.

Here's a closer look at the Medicare proposals:

* Require Medicare beneficiaries to pay a higher portion of the Part B premium.  Premiums for Part B cover physician and hospital outpatient services.  The premiums of most seniors, those with incomes under $85,000, equal 25 percent of Medicare's total cost of services, and the federal government covers the other 75 percent of the cost.  This proposal would require seniors to pay 35 percent instead - like higher-income seniors do now.  The 2010 Medicare Trustee report estimates that Part B premiums at the 35% level would be $159.30 per month in 2012.

* Require new deductibles and cost-sharing while limiting what Medigap plans could cover.  Because Medicare doesn't cover all of the costs, seniors purchase supplemental coverage, known as "Medigap," to cover deductibles, and co-insurance.  A proposal from President Obama's Fiscal Commission would impose a new deductible of $550 and new cost-sharing. Then, it would restrict what Medigap plans could cover, adding up to $3,000 in new out-of-pocket costs that the more comprehensive Medigap plans cover now.

* The government would provide a fixed amount of money or "voucher" to purchase private coverage.  Currently Medicare pays per procedure.  Under this proposal the federal government would provide a fixed amount of money or "voucher," to private health plans to provide coverage. The amount of the voucher would be limited to the growth of the gross domestic product plus one percentage point.  However, for the last 40 years national healthcare spending has exceeded the growth of the gross domestic product by more than two percentage points.  The non-partisan Congressional Budget Office said that over time the vouchers would become increasingly inadequate to purchase sufficient coverage, or that seniors would face significantly higher premiums.

"The Medicare Trustees already estimate that Medicare Part B and Part D premiums and out-of-pocket costs take about 27 percent of average Social Security benefits," states TSCL Chairman, Larry Hyland. "And that understates actual costs because it doesn't include what people pay for their supplements or Medicare Advantage plans," he notes.  "These proposals simply shift a greater portion and more risk to seniors, making Medicare even less affordable for low- and middle-income beneficiaries," Hyland says.  "We urge seniors to contact their lawmakers in Congress and let them know what you think of these ideas to cut the deficit," he adds.  TSCL lobbies to keep Medicare affordable and protect seniors from cuts to Social Security benefits and reductions to the COLA.  In addition TSCL supports legislation to provide a more fair and adequate COLA.


With over 1 million supporters, The 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. The Senior Citizens League is a proud affiliate of The Retired Enlisted Association.

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