WASHINGTON (AP) — It’s a health care change that President Barack Obama and Republicans both embrace: Expand a current, little-known law so more retirees the government considers well-off are required to pay higher Medicare premiums.
That plan is likely to be part of any budget deal to reduce the overhang of federal debt, raising $20 billion or more over 10 years. It could come as a shock to many seniors who will have to pay the higher premiums even though they consider themselves solidly middle-class, and by no means wealthy.
That’s what happened to Tom James. He and his wife recently got an official notice that they will have to start paying more for Medicare next year, about $1,000 for the two of them. James is among the 5 percent of beneficiaries currently facing higher “income-related” premiums. If the budget change goes through, that number will grow to 25 percent.
“I was blindsided,” said James, a retired bank examiner who lives near Philadelphia. “The camel has got his nose in the tent now, and the question is how far do they want to go with that?”
The idea is to continue broadening the reach of income-based Medicare premiums introduced under former President George W. Bush and later expanded by the Patient Protection and Affordable Care Act (PPACA).
How would it work?
It’s complicated. Think of it as two bites.
First, the current income-based monthly premiums for Medicare’s outpatient and prescription drug coverage would be ratcheted up. Those surcharges now are assessed on a sliding scale, and kick in for individual beneficiaries making more than $85,000, or $170,000 for couples.
Second, the number of beneficiaries who have to pay those higher monthly premiums would gradually expand by a few hundred thousand people each year. That would be done by extending a temporary freeze on the income thresholds at which the higher premiums are assessed.
Without adjusting those thresholds for inflation, 1 in 4 beneficiaries would be on the hook eventually, compared with about 1 in 20 now.
Backers of the idea — Obama administration officials, prominent Republicans in the House and Senate and nonpartisan experts — say it’s foolish for Medicare to keep subsidizing people who can afford to pay their own way, particularly when the program faces long-range financial problems.
“What we’re talking about here is a premium structure that makes sense, by slowly covering less and less,” said Robert Bixby, executive director of the nonpartisan Concord Coalition, which advocates reducing the deficit. “Politicians have been afraid to charge full fare because of public reaction. But that time is coming to an end.”