Medicare Issues: "Dual Eligibles" and Higher Premiums for the Wealthy

October 6, 2003
A large group of the Congressional conferees charged with reconciling the two Medicare prescription drug bills reportedly will defy President Bush and support providing a Medicare drug benefit to both Medicare and Medicaid beneficiaries.

Meanwhile, the notion of increasing premium payments for more affluent Medicare beneficiaries is gaining support on Capitol Hill among not only Republicans but also Democrats, who have previously been vehemently opposed to the idea.

The White House told Congress last week that it does not want to provide a Medicare drug benefit to the six millions poor elderly and disabled Americans who are now covered by the Medicaid program.

The House version of the Medicare bill would shift the cost of the "dual eligibles" -- those covered by Medicaid as well as Medicare -- to the federal government. The states presently spend $7 billion a year to provide them with prescription drug coverage.

The White House position is at odds with the House of Representatives, AARP, Consumers Union, the Catholic Health Association and the National Governors Association, which have all urged that Medicare continue to provide benefits to all beneficiaries, regardless of income.

The proposal to link premiums to income is a potential complication as the negotiators try to reach agreement on a compromise bill by Oct. 17. But it may also be a way to reduce the cost of the prescription drug benefit -- something that would be very welcome as conferees contemplate the massive and fast-growing federal deficit.

Democrats have generally embraced the philosophy that Medicare is an "entitlement" that is equally available to all, rich and poor alike. They argue that raising the premium for the wealthy is a "dangerous first step" in turning Medicare from a universal social insurance program into a welfare program.

But quickly gaining acceptance is the rather stark reality that higher premiums for the affluent would help avert drastic cuts in Medicare and other important programs. The pressure for such cuts will increase as the deficit increases and baby boomers become eligible for Medicare and Social Security.

Senator Majority Leader Bill Frist (R-Tenn.) has told the Medicare negotiators they have a "mandate" to charge the affluent a higher premium.

Most Medicare beneficiaries now pay $58.70 a month, or about $704 a year, for doctors' services and other outpatient care.

The New York Times reported that one change under consideration would affect only people with annual incomes above a certain level, perhaps $75,000 or $100,000. Individuals with incomes exceeding $200,000 could see their premiums triple, to about $2,100 a year.