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4 Ways Obama’s Budget Would Change Medicare

Adapted from an article by Mary Agnes Carey, Senior Correspondent, Kaiser Health News

President Barack Obama’s fiscal 2014 budget includes a variety of what he says are “manageable” changes for Medicare’s 54 million beneficiaries as well as for the hospitals, nursing homes and other health care providers that serve them.

medicare-pillThat assessment has drawn concern from some patient and provider groups that, although recognizing the need to address the nation’s rising health care costs, say seniors shouldn’t bear the brunt of efforts to reduce entitlement spending.

“Instead of making harmful cuts to Medicare or shifting additional costs onto beneficiaries, we need to look for savings throughout the health care system, including Medicare,” said AARP Executive Vice President Nancy A. LeaMond.

What follows is a closer look at key provisions in Obama’s fiscal 2014 budget, which would reduce the growth in Medicare spending by $371 billion over the next decade. Keep in mind that Obama’s plan is far from the last word. House Republicans have approved their own fiscal 2014 blueprint, as have Senate Democrats.

1. Higher Cost Sharing for New Medicare Beneficiaries

Joe Baker, president of the Medicare Rights Center, said that Medicare proposals that “increase deductibles and co-pays, and tax Medigap plans that ensure financial security, must be rejected.”

2. Wealthier Beneficiaries Pay More

Current law already requires individual beneficiaries whose incomes are $85,000 and above ($170,000 and above for couples) to pay a larger share of Medicare Part B (outpatient services like doctor visits and laboratory services) and Part D (prescription drugs) premiums. While most beneficiaries pay 25 percent of their Part B premiums, higher-income beneficiaries pay between 35 to 80 percent, depending on their income.

Obama’s plan would increase the lowest income-related premium to 40 percent and cap it at 90 percent. His plan would also maintain the current income thresholds until a quarter of Part B and Part D beneficiaries are paying the higher income-related premiums.

In a 2012 analysis, the Kaiser Family Foundation found that if the proposal to have a quarter of all beneficiaries pay the higher premiums were implemented last year, beneficiaries with incomes at or above $47,000 for individuals and $94,000 for couples would be paying higher income-related Medicare premiums. (KHN in an editorially independent program of the Foundation.)

The Obama administration says the proposal would help improve Medicare’s financial stability by reducing how much the government spends on Medicare for beneficiaries who can afford to pay more. But the Center for Medicare Advocacy fears asking higher-income people to pay a greater share of premiums “might lead to more people choosing not to participate in Medicare. Fewer participants in [Medicare] B and D would result in increased costs for the remaining participants.”

3. Doughnut Hole Closing Faster, Higher Drug Rebates for Low-Income Beneficiaries

In a statement, the Pharmaceutical Research and Manufacturers of America said the rebate proposal would increase beneficiary premiums and copays.

4. Provider Cuts

In its budget document, the Department of Health and Human Services cites a MedPAC finding that these additional payments “significantly exceed the actual added patient care costs these hospitals incur.”

Hospital groups maintain that the cuts to bad debt reimbursement and medical education payments would weaken hospitals’ ability to provide care and to train physicians, nurses and other health professionals.

What Obama Left Out

 

Also of Interest

 

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