NCPA - National Center for Policy Analysis

Obama's Medicare Plan: Seniors Will Pay More

November 13, 2012

Today's seniors are guaranteed higher Medicare costs due to the Affordable Care Act (ACA), say Robert E. Moffi, Rea S. Hederman, Jr., and Alyene Senger of the Heritage Foundation.

  • Between 2012 and 2017, seniors' standard Medicare Part B monthly premiums are expected to go from $99.90 to $128.20.
  • In addition, Part B deductibles will rise from $140 to $180.
  • Furthermore, hospital deductibles will increase from $1,156 to $1,336.

The Obama administration is under the illusion that the life of the Medicare trust fund can be extended while simultaneously using Medicare money to pay for the ACA. The law changes Medicare payment formulas across the board. Moreover, the ACA will increase Medicare taxes, increasing the Medicare payroll tax to 3.8 percent on high-income earners.

In the fiscal year 2013 budget proposal, Medicare Parts B and D would see an increase in premiums by 15 percent for upper-income seniors. By 2035, those premium increases will expand to cover 25 percent of all beneficiaries of Medicare.

Starting in 2017, there will be a new fee imposed on those joining Medicare. There is a $25 increased Part B deductible and a $100 copayment for home health services in some cases. Most new beneficiaries will be affected by a premium surcharge for those that choose a Medigap plan with first-dollar coverage.

Drug costs will also increase as part of the administration's health care law. The law spends $48 billion to close the "donut hole," the point at which beneficiaries have to pay the full cost of their prescription drugs. But this comes at a cost, as beneficiaries of Medicare Part D will see an increase in premiums of 4 percent in 2011, increasing to 9 percent in 2019.

In the status quo, seniors will pay more as a cost-shifting measure to fund the new health care law. The administration has already cut the Medicare provider payments, mostly to pay for the health care overhaul. As a result, the government may not be able to pay for Medicare, which reduces access to care for the people that need it most.

Source: Robert E. Moffit, Rea S. Hederman, Jr., and Alyene Senger, "Obama's Medicare Plan: Seniors Will Pay More," November 1, 2012.


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