Floor Statement of Senator Max Baucus (D-Mont.) Regarding Medicare Premiums

Mr. President, unless the Senate acts soon, millions of seniors and disabled individuals will face sharply higher Medicare premiums next year. In this great recession, we must act quickly to ensure that we do not allow a formulaic quirk to punish our seniors on fixed incomes and our financially-strapped states.

Many seniors have their Medicare Part B premiums deducted from their monthly Social Security checks. Normally, the Social Security cost of living adjustment is greater than the increase in the Part B premium for that year. As a result, the beneficiary’s monthly checks in the new year are greater than their monthly checks were in the last year.

But next year, there is not likely to be an upward cost of living adjustment to Social Security checks. When that happens, most Medicare beneficiaries are held harmless against reductions in their Social Security checks. The part B premium is reduced, so that their monthly Social Security checks in the new year are not less than they were in the prior year.

But 27 percent of Medicare enrollees do not benefit from the hold-harmless. The absence of a COLA will expose these seniors to big premium increases next year.

Under current law, these enrollees not only have to pay their own premiums, but they must make up for the premiums not being paid by the 73 percent of beneficiaries who will be held harmless. These 27 percent of Medicare recipients will be forced to shoulder the full load of next year’s premium increases. This will mean an increase in premiums of from $96 to $120 a month next year.

Who are these recipients- They include low-income beneficiaries who participate in both Medicare and Medicaid. They include new enrollees in Medicare Part B. They include Medicare Part B enrollees who don’t receive Social Security, such as some Federal retirees. And they include higher-income enrollees who already pay higher premiums.

This burden will hit Medicare beneficiaries hard. But financially-strapped states will also feel the effect. Because state Medicaid programs pick up the cost of Part B premiums for Medicare beneficiaries who are also eligible for Medicaid, the premium hike will also hit state budgets.

States all across the nation are facing huge deficits and difficult choices. We should not allow this quirk in the law to add to their burdens.

The Medicare Premium Fairness Act would correct this problem. It would ensure that these 27 percent of Medicare beneficiaries would not have to shoulder any additional burden. No Medicare Part B enrollee would face a higher premium next year than this year.

The bill would provide security to seniors on fixed incomes and prevent a federal cost-shift to states. And the bill is fully paid-for. It would tap into the Medicare Improvement Fund, which was created to solve problems like this.

Inaction on this bill is not an option for seniors and states. I hope that this bill will have broad bipartisan support.

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