Getting a Rise out of Seniors: Bush Announces Higher Medicare Premiums

During Labor Day Weekend 2004, the Bush administration announced a rise in Medicare premiums for 2005.

Critics claim that the timing was no accident –the news was announced while most people were out enjoying the long holiday weekend. Democrats also claim that the Bush administration is to blame for rising Medicare premiums, while Republicans assert that Bush is simply following rules set by members of Congress – including John Kerry.

In addition to investigating the parties’ claims, we need to ask ourselves a simple question: are Medicare beneficiaries carrying too much of the healthcare burden?

Healthcare – a burden to many

The rising cost of Medicare is difficult for seniors living on Social Security alone.

The part of Medicare that pays for 80 percent of doctor’s visits and lab work, called Medicare Part B, will have higher monthly premiums in 2005. Seniors will pay $78.20 per month instead of $66.60, a 17.4 percent increase. While $11.60 more a month may not sound like much, it is the highest dollar increase in the history of the program. And when added to Medicare’s rising deductibles, the costs could become unmanageable for some seniors.

These rising costs are in addition to the upcoming cost of the prescription drug benefit, called Medicare Part D, which will begin in 2006. That year, seniors will begin paying $35 a month for private prescription drug plans. In 2006, minimum out-of-pocket Medicare costs will amount to $1,740 for the year, according to Newsday, and this amount is 37 percent of the average person’s Social Security income, according to The New York Times.

Why are premiums rising?

Medicare premiums are rising because the cost of healthcare is rising. But what does this really mean?

It depends on whom you ask. Republicans say that seniors are getting more benefits, so they’re paying more in premiums. This is true – in part. Seniors will have increased benefits and increased premiums when the prescription drug plan begins in 2006, but even without the prescription benefit, premiums are rising. For more on the prescription drug benefit, click here.

Republicans and Democrats agree that rising premiums are due in part to rising healthcare costs. More expensive medicines and technology affect everyone’s healthcare costs, but Medicare is also offering HMOs billion-dollar subsidies as well so that they – the HMOs — will provide health coverage for seniors who opt into private plans. These subsidies increase the overall cost of Medicare, which causes the rise in premiums. (The law states that premiums must pay for 25 percent of the Medicare budget while taxpayer dollars take care of the rest.)

Although they won’t benefit from Medicare subsidies to HMOs, seniors who stick with the traditional Medicare plan will see their premiums rise. As the traditional plan becomes more expensive, seniors who can afford it will be more likely to switch to private plans, leaving poorer and sicker seniors on the traditional plan. This, in turn, will increase the costs of traditional Medicare.

Democrats say

Democrats want to put a cap on Medicare premiums, or at least keep them from rising faster than Social Security.

Democratic Senators Debbie Stabenow of Michigan and Edward Kennedy of Massachusetts have introduced a bill that would limit the 2005 premium increase to around 3 percent so that it would not outpace Social Security’s cost-of-living increase.

Democrats accuse the Bush administration of doing little to limit rising Medicare costs and premiums and are eager to turn the subject into a major campaign issue.

Republicans say

Republicans argue that the premium increases are the law, set by a bill passed in 1997 to balance the budget. Bush is merely enforcing the law by requiring higher premiums, Republicans say, and Senator Kerry voted for these higher premiums five times.

While Republican’s charges against Kerry are true (he did vote five times to decrease the deficit in this way, from 1985 to 1997), what they’re not saying is that the premium increases were part of a comprehensive budget bill that was made up of hundreds of provisions affecting many federal programs in addition to Medicare.

How much weight should beneficiaries carry?

The real question is how much do we expect seniors to pay for shifts in Medicare policy and for rising costs?

Do we expect beneficiaries to pay for healthcare costs as they go up, regardless of the cause for those cost increases? Do we want government to try to control healthcare costs? If so, how?

How do we see ourselves, our parents, and our grandparents making ends meet when healthcare is so expensive?

Discuss these questions with other WomenMatter readers in one of our online forums. And if Healthcare is important to you, sign up for an e alert, and we’ll keep you posted on the topic.

Make sure you register to vote and contact your representatives, because your voice matters.

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Posted on: 10/10/2004