A costly glitch

15 mil­lion se­niors face steep hikes in Medi­care Part B pre­mi­ums.

The Washington Post Sunday - - SUNDAY OPINION -

THERE WAS prac­ti­cally no in­fla­tion over the past year, which means that 60 mil­lion peo­ple liv­ing on So­cial Se­cu­rity won’t be get­ting an an­nual in­fla­tion adust­ment in their ben­e­fits. You’d think that’s a good-news story, or at least a neu­tral one — what’s not to like about older Amer­i­cans es­sen­tially hold­ing steady eco­nom­i­cally?

Alas, due to a lit­tle-known law, this seem­ingly be­nign sit­u­a­tion is ac­tu­ally cre­at­ing a bit of havoc else­where in the fed­eral en­ti­tle­ment sys­tem, specif­i­cally in Medi­care. In years when So­cial Se­cu­rity ben­e­fi­cia­ries get no in­fla­tion bump, their Medi­care pre­mi­ums can’t go up — ex­cept for roughly a third of re­tirees, who must shoul­der all of the bur­den of ris­ing costs. Con­se­quently, about 15 mil­lion se­niors are look­ing at premium spikes of up to 50 per­cent for Part B, the pro­gram that cov­ers out­pa­tient care. A typ­i­cal in­crease would be from about $105 per month to $159, ac­cord­ing to a Con­gres­sional Re­search Ser­vice re­port. And older Amer­i­cans are howl­ing in protest, to a Congress that’s al­ready hav­ing trou­ble meet­ing dead­lines re­gard­ing the bud­get and the fed­eral debt ceil­ing.

The first step in think­ing about this prob­lem is to keep it in per­spec­tive. Yes, a 50 per­cent in­crease is abrupt, but all se­niors would have faced a 15 per­cent in­crease if So­cial Se­cu­rity ben­e­fits had re­ceived an in­fla­tion ad­just­ment. What’s more, about a third of those fac­ing a premium spike are either high-in­come re­tirees, who may ap­pro­pri­ately be ex­pected to pay more, or brand-new en­rollees, who aren’t re­ally be­ing hit with an in­crease be­cause they weren’t in the pro­gram be­fore. (Wel­come to Medi­care, guys!) About twothirds of the af­fected pop­u­la­tion are el­derly poor peo­ple for whom Med­i­caid pays Medi­care ben­e­fits; in their case, what we’re re­ally look­ing at is a ma­jor shift­ing of costs to the states, which would have to pay about $2.3 bil­lion ex­tra.

Three prin­ci­ples should guide Congress in con­sid­er­ing a fix. First, in a sit­u­a­tion in which ev­ery­one was ex­pect­ing a 15 per­cent premium in­crease, no one now slated to pay more is en­ti­tled to a zero in­crease, es­pe­cially not bet­ter-off se­niors who can rea­son­ably pay more. Sec­ond, the poor­est ben­e­fi­cia­ries, who are the ma­jor­ity of those af­fected, should be pro­tected. And third, the en­tire cost of the fix — $7.5 bil­lion, as­sum­ing that Congress does, in fact, limit the in­crease for the 15 mil­lion se­niors to 15 per­cent — should be paid for with off­sets else­where in the bud­get, prefer­ably from other health-care pro­grams. This glitch is no rea­son to dip into Medi­care’s re­serve fund, as some have sug­gested.

As it hap­pens, Pres­i­dent Obama’s last bud­get rec­om­mended a phased-in in­crease in Part B de­ductibles for new ben­e­fi­cia­ries, start­ing in 2019, which would save $7 bil­lion all by it­self. Adopt­ing a change like that could help pay for a fix, while giv­ing Medi­care a mea­sure of what it re­ally needs: struc­tural re­form.

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