By Melissa Attias, CQ Roll Call
October 20, 2015 -- Congressional efforts to block a looming premium spike for millions of Medicare beneficiaries could add upwards of $10 billion to the cost of a budget deal but also provide powerful incentives for lawmakers to throw their weight behind an agreement.
An estimated 16.5 million seniors, or 30 percent of enrollees in Medicare Part B, are expected to see their monthly premiums for doctors' visits and outpatient services rise by at least $54 in 2016. The remainder are protected by a "hold harmless" provision preventing Part B premiums from rising more than their Social Security paychecks.
House and Senate Democrats proposed forestalling the increase with legislation (S 2148, HR 3696) before the Columbus Day recess that would freeze premiums for all beneficiaries and limit other out-of-pocket costs. The seniors lobby group AARP also joined in last week, urging lawmakers to step in.
But Republicans so far have declined to outline their own approach, and may remain quiet until the Obama administration formally announces final premium rates in the coming weeks. That wait, combined with the uncertain state of House GOP leadership and fiscal conservatives' likely insistence on offsetting cuts to pay for the premium fix, make it likely that any compromise would get wrapped up into a year-end budget deal.
"I think that's the way a lot of this stuff is going to get done at this point," Rep. Dina Titus of Nevada, the sponsor of the Democrats' House bill, said in an interview. "That's fine with me as long as it gets in somewhere."
Including a premium fix in the package could assuage wavering lawmakers concerned about other health program cuts that could be included in a budget package that eases discretionary spending caps.
The premium increase would fall on new Medicare enrollees, those who do not receive Social Security checks and higher-income beneficiaries. But the biggest constituency—about 9 million people, according to the AARP—are low-income seniors enrolled in both Medicare and Medicaid who have their premiums paid by the states.
The National Association of Medicaid Directors noted in a letter to congressional leaders that the state share of Medicaid is expected to rise by more than $2 billion next year if the premium spike occurs.
Partial Fix
An aide to Speaker John A. Boehner said House Minority Leader Nancy Pelosi and her staff have spoken to the Ohio Republican and his staff about the premium spike and that work is continuing on the issue. Boehner's staff has also indicated that the cost of blocking the increase would have to be offset, the aide noted.
Aaron Fobes, a spokesman for Senate Finance Chairman Orrin G. Hatch of Utah, said his boss "looks forward to finding a fiscally responsible path forward on this problem that can pass both houses of Congress."
Insistence on an offset may prompt lawmakers to decide on a partial fix that would limit how much premiums would rise and reduce the projected cost from about $10 billion to $7.5 billion according to unofficial estimates from advocates, though the true price tag will depend on the final premium rates.
The 2015 Medicare trustees report estimated that the premium rate for affected enrollees, absent congressional action, would rise from the current $104.90 per month to $159.30 per month in 2016. A partial fix would mean the enrollees would pay $120.70.
"The obvious advantage of the approach that allows a small increase but avoids the very large one is that it's much less expensive," said Paul Van de Water, senior fellow at the liberal-leaning Center on Budget and Policy Priorities.
Another tactic could involve protecting certain categories of beneficiaries from the premium spike—leaving the increase for high-income beneficiaries, for example—though that could present political complications. Lawmakers could also try to find some sort of permanent solution, though many observers think Congress likely only has the bandwidth for a short-term fix.
Whatever lawmakers settle on, Robert Moffit of the conservative Heritage Foundation is urging them to fully offset the cost rather than repeat the approach they took replacing Medicare's physician payment formula earlier this year (PL 114-10). He wants to see changes that would begin to improve Medicare's long-term solvency, such as combining hospital and outpatient coverage into one deductible.
"This crisis is very, very manageable," Moffit said. "The issue is, do we want to use this as an opportunity to, number one, actually save the money that's necessary to save, and to use the opportunity to improve the program for once."
But Andrew Scholnick, senior legislative representative on AARP's federal health and family team, said changes to Medicare that increase cost-sharing for beneficiaries were already included as offsets to the physician payment package.
"It wouldn't be right to do it again this time around," Scholnick said.
One offset that's been floated is a proposal in President Barack Obama's budget to reduce Medicare reimbursements for physician-administered drugs, according to a source following the budget discussions. That's expected to save about $7.5 billion, the source noted, roughly equal to the expected cost of a partial fix.
Administrative Fix?
While advocates are pressing for congressional action, there is also some speculation that the Health and Human Services Department could adjust the premium increase when it releases final rates for next year.
Tricia Neuman, director of the Kaiser Family Foundation's Program on Medicaid Policy, said HHS Secretary Sylvia Mathews Burwell has the discretion to set premiums and deductibles, as long as premium revenues cover 25 percent of Part B spending and provide for adequate reserves. But the law does not define adequate reserves, she said, meaning the premium increase could be lower than the trustees projected.
"That's the area where there may be some flexibility, but there's only flexibility up to a point," Neuman said.
In the meantime, Democrats are continuing to press for quick action. House Minority Whip Steny H. Hoyer of Maryland said in a statement that he urges "House Republican leaders to come to the table to find a fiscally responsible solution to prevent these arbitrary spikes in premiums." And Illinois Democrat Jan Schakowsky maintained in a separate statement that "Republicans have yet to put forward any proposal and have been unwilling to even come to the table to negotiate."
Kevin Brady of Texas, chairman of the House Ways and Means Health Subcommittee, said before recess that his panel is monitoring and reviewing the issue and listening to members' concerns.
White House spokesman Josh Earnest told reporters that the Obama administration has spoken with members of Congress about the issue and its interest in resolving it. "I think the goal would be to try to alleviate the unintended burden on those Medicare recipients who will see a much higher premium next year," he said.