FOR IMMEDIATE RELEASE  
Thursday, September 24, 2009  

CONTACT: Cullen Schwarz
(202) 225-5802

HOUSE VOTES TO HALT JUMP IN MEDICARE PREMIUMS

Senate Must Now Act or Medicare Beneficiaries Could See Premiums Increase 25%

Washington, D.C. – The U.S. House of Representatives today approved legislation to protect seniors and people with disabilities from substantial, unfair increases in their 2010 Medicare premiums.  In a normal year, all Medicare beneficiaries would see a small increase in their premiums, but due to current rules regarding Medicare and Social Security, nearly 75% of Medicare Part B recipients would see no increase next year, while one in four Part B beneficiaries would see as much as a 25%  jump in their premiums.  H.R. 3631, the Medicare Premium Fairness Act, would ensure that no Medicare Part B recipients are hit with a premium increase in 2010.  

“There’s no way we can allow a major increase in Medicare Premiums for seniors next year,” said Congressman Gary Peters.  “Without this legislation, many seniors already struggling during this downturn would be squeezed even further.  The State of Michigan’s budget would also be hit, as the State covers premiums for low-income seniors, and we all know one more burden is the last thing our state budget can take right now.  Enacting this legislation is an absolute must and I hope the Senate will act soon.”

H.R. 3631 was just introduced in the House yesterday.  AARP, the National Committee to Preserve Social Security and Medicare (NCPSSM), the Center for Medicare Advocacy (CMA), Alliance for Retired Americans and the National Active and Retired Federal Employees (NARFE) Association have all endorsed H.R. 3631. 
  

Background
 
Currently, 42 million seniors and people with disabilities are enrolled in Medicare Part B.  The standard Part B premium for 2009 is $96.40 per month (higher for individuals with incomes over $85,000 or $170,000 for couples).  By law, the premium is calculated each year to cover approximately 25 percent of the cost of the Medicare program.

Premiums would normally increase to roughly $103 next year to cover 25 percent of the program’s cost. 

However, a current law “hold harmless” policy ensures that most seniors do not see a decrease in their Social Security checks if the Part B premium increase is projected to be greater than the increase in Social Security.  Because of the recession, next year’s Social Security cost-of-living adjustment (COLA) may be zero and checks will not increase, the current law "hold harmless" means that Part B premiums will not increase for 2010 for 73 percent of enrollees.
 
The other 27 percent of enrollees are not held harmless under current law.  These include low-income individuals who are eligible for Medicare and Medicaid (18%, or 7.3 million beneficiaries), higher-income Medicare beneficiaries (5%, or 2.1 million beneficiaries), new Medicare enrollees (3% or 1.3 million beneficiaries) and enrollees whose Medicare premiums are not deducted from their Social Security checks (2%, or 850,000 beneficiaries).  Because of the way the law is written, premiums for the enrollees who are not currently held harmless would be disproportionately increased to $110-$120 per month, unless Congress acts.  This is the first time that such an interaction has occurred.

This bill would extend the current hold harmless policy to all Medicare enrollees, meaning that no seniors will see a decrease in their Social Security checks due to Medicare Part B premiums.
 
The Congressional Budget Office estimates the cost of the bill at $2.8 billion for 2010 and the bill is fully paid for by reducing the Medicare Improvement Fund, a non-controversial set-aside fund in Medicare.

###