NCPA - National Center for Policy Analysis


September 11, 2006

Seniors with higher incomes may be in for a surprise when they get their 2007 Medicare premium notices this fall.  The premiums for physician visits and outpatient services will be tied to beneficiaries' incomes for the first time in the program's 41-year history.  The higher someone's income, the bigger the premium will be.

Monthly premiums for the so-called Medicare Part B are projected to increase to at least $98.40 in January from $88.50 to cover Medicare's steadily growing costs, but the increase will be larger for individuals with annual incomes above $80,000 and for couples with incomes over $160,000.

The "means testing" will be phased in over three years:

  • Depending on their income, affluent seniors will pay from $111.50 to $170.60 per month the first year, according to estimates by the Senior Citizens League; by 2009, they'll pay from $172.80 to $395 per month.
  • At the end of the phase-in, the wealthiest will pay more than triple what middle-income seniors will.
  • Means testing will affect about 1.2 million of Part B's 40 million beneficiaries in 2007 and 2.8 million by 2013, according to the Congressional Budget Office.
  • It's projected to save taxpayers $13 billion over 10 years, or about three-tenths of 1 percent of Medicare's budget.

Matt Moore, a senior policy analyst with the National Center for Policy Analysis in Dallas, agrees with the need for a fundamental reform of Medicare.

"We have a crisis of entitlements on our hands," he said.  "We've been talking about Social Security, but we also need to have a national discussion about Medicare and how we're going to pay its long-term costs."

Source: Bob Moos, "Another Medicare shot to the wallet; Premiums going up, especially for seniors with higher incomes," Dallas Morning News, September 11, 2006.


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