9/15/2006

Some Medicare advocates say the higher premiums will prompt some wealthy people to drop out of Medicare, leaving the program to serve poorer, sicker people, and undermining Medicare's broad political support and its finances. "Unfortunately, if seniors start to drop out of Medicare, Congress will be more likely to cut benefits later. This is another step in dismantling Medicare," said George J. Kourpias, President of the Alliance.

The surcharge rises with income, and will be much higher in 2008 and later years. The surcharge was established under a little-noticed provision of the 2003 law that added a prescription 'drug benefit' to Medicare. About 1.5 million of the 42 million Americans on Medicare will have to pay the higher
premiums based on income.

The standard monthly premium for Part B, which covers doctor visits and outpatient hospital care, will rise to $93.50 from $88.50 this year, according to Mark B. McClellan, head of the Centers for Medicare and Medicaid Services (CMS).

Individuals with an annual income of more than $80,000 (or more than $160,000 for married couples) will pay monthly premiums of $106 to $162.10, depending on income.

McClellan said the income-based premiums will save the government $7.7 billion over five years and more than $20 billion over a decade.

The standard premium has shot up an average of 12 percent a year since 2001, when it was $50 a month. The premium is set each year to cover about 25 percent of projected spending under Part B of Medicare, with general tax revenues paying the remaining 75 percent of the cost.

The changes will be some of Mr. McClellan's final acts at CMS. He has overseen the agency since 2004, but announced last week that he will leave by early October. The CMS administrator oversees Medicare, Medicaid and the federally subsidized State Children's Health Insurance Program (SCHIP),
which together serve about 90 million Americans and account for more than $535 billion a year in federal spending. A new administrator has not been appointed.

Bush Promise to Privatize Social Security Not Forgotten

President Bush renewed his vow to privatize Social Security, saying that in 2007 he "will be able to drain the politics out of the issue," because it will not be an election year. In an interview with the Wall Street Journal, Bush was confident that the Republicans would prevail in the 2005 Fall elections and support his Social Security plan in the next Congress.

In 2005, an overwhelming number of Americans opposed his plan to create private accounts. At the same time, Senate Minority Leader Harry Reid (D-NV) and House Minority Leader Nancy Pelosi (D-CA) have kicked off a nationwide "Golden Promise" campaign, calling on members of Congress to sign
a petition and pledge to oppose any effort to privatize Social Security. "We must stick together and urge our members of Congress to sign the Golden Promise pledge," said Ruben Burks, Secretary-Treasurer of the Alliance.

Donut Hole Day Quickly Approaching

September 22, 2006, marks the day when the greatest number of Medicare Part D participants will fall into their plan's 'donut hole', thus losing their prescription drug coverage until they've spent $3,600 of their personal money to cover their medication needs.