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WASHINGTON _ Year after year, Medicare premiums are taking a bigger bite out of Social Security benefits, leading some advocates to wonder whether President Bush and lawmakers are pursing the right issue.
While Bush has been campaigning for private Social Security accounts, administration officials last week predicted that the premium for Medicare Part B _ which covers physician and related services _ will increase $11 a month to $89.20 next year. That would be a 34 percent increase over two years ago and nearly twice the $45.50 level in 2000.
"This is kind of a wake-up call ... to pay more attention to health care costs," said John Rother, policy director for AARP, the nation's largest organization for those 50 and older. "Maybe we're focusing on the wrong issue. Social Security is easier to deal with, but Medicare and Medicare costs are much more urgent."
Four years ago, Medicare's premium increase represented a 15 percent chunk of Social Security's annual cost-of-living-adjustment (COLA). That has been rising each year, and next year will reach about 58 percent, according to Craig Caplan(cq), a senior policy adviser with AARP's Public Policy Institute.
In 2001, the Medicare premium accounted for 6 percent of the average 65-year-old retiree's total Social Security benefit, according to Caplan. Next year, it will amount to 9 percent, a 50 percent increase.
Low-income beneficiaries are protected from the premium increases in two ways, said Gary Karr, director of media affairs for the federal Centers for Medicare and Medicaid Services (CMS).
About 6 million low-income beneficiaries have their premiums paid by one of several programs. In addition, the law prohibits beneficiaries from paying more for the premium increase than they receive through the COLA.
Beneficiary advocates worry that the premium increase may go even higher than its projected 14 percent hike before becoming official this fall.
"If I were a betting man, I'd predict that you will see another few percentage points coming in September or October," said Robert M. Hayes, president of the Medicare Rights Center, a beneficiary rights advocacy group.
That's because a fight is brewing over how much doctors will be paid next year, a key factor in how much beneficiaries will pay in premiums. Under law, Medicare beneficiaries pay 25 percent of the total estimated cost Medicare Part B services.
Under a formula set years ago, doctors' fees for Medicare services are scheduled to be cut 4.3 percent from current levels next year, and 26 percent by 2011.
Not surprisingly, the American Medical Association has been fighting the cut with all its considerable lobbying power.
Instead of the cut, doctors are urging lawmakers to adopt the congressionally appointed Medicare Payment Advisory Commission's recommendation of a 2.7 percent increase in their fees next year.
Dr. J. James Rohack, the AMA's chairman, warned that new Medicare beneficiaries "may not be able to find a physician that is willing to care for them" if doctors know their payments will be slashed 26 percent within five years.
Noting that Medicare's deductible for a hospital visit is $912, Rohack said lawmakers should place a higher value on physician services.
"If my physicians are keeping me healthy and keeping me out of the hospital, it is going to be less costly than not detecting an illness and just waiting for the person to show up with their heart attack and then treating them that way," he said.
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CMS Administrator Dr. Mark McClellan has advocated shifting away from paying doctors based on their volume of services and toward the effectiveness of treatment.
Doctors would like to see Medicare's entire financial structure overhauled. Currently, hospital services are financed out of payroll taxes, and doctor services out of premiums and the federal general fund.
"I don't know of any private medical insurance program that does things that way," Rohack said. "Usually, when I pay my premium, it covers hospitalization, professional services, the whole ball of wax."
Rother, of AARP, said he also is worried about what will happen to beneficiaries if doctors' fees are cut, but he said any increase in doctor payments should not affect premiums.
Medicare's Part B is only one of two premiums beneficiaries will face next year. The new drug benefit _ Part D _ takes effect Jan. 1, and is expected to carry a $35 monthly premium for 2006. Beneficiaries will have until May 15 to enroll in a private drug plan or face a permanent 1 percent penalty for each month they delay.
Ron Pollack, executive director of Families USA, a nonpartisan health care advocacy group, said premiums are part of a larger picture of increasing health care costs for Medicare beneficiaries.
Next year, a typical 65-year-old Medicare beneficiary will spend 37 percent of his or her Social Security income on Medicare premiums, deductibles and copayments, Pollack said.
By 2016, the share would be 45 percent and by 2026 it will be 53 percent, he said.
"It's huge," said Pollack. "It's clear that these costs are unaffordable."
But Karr noted that Medicare Part B benefits are projected to exceed Social Security benefits after 2050.
"If your premium goes up 10 bucks, but because of that you have $20 less in health care costs, have you gotten a bad deal or a good deal?" Karr asked. "The answer is you've gotten a good deal.
"Benefits are going up faster than premiums," he said.
Larry Lipman's e-mail address is larryl@coxnews.com
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Cox News Service
