Medicaid Directors Want Congress to Limit Impact of Medicare Premium Hikes

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By Nathaniel Weixel and Mindy Yochelson

Oct. 14 — Medicaid directors are calling on House and Senate committee leaders to take immediate action to ensure states aren't negatively affected by impending Medicare Part B premium and deductible increases for 2016.

Many Medicare beneficiaries have their premiums paid for by the Medicaid program, the National Association of Medicaid Directors said in a letter sent Oct. 14. The NAMD said shifting state resources to accommodate the “unprecedented increase will put undue pressure on state Medicaid programs, as well as other state programs and priorities.” Without action, Part B premiums could increase by 52 percent—from $104.90 per month to $159.30—for 30 percent of beneficiaries in 2016, according to predictions from the 2015 Medicare Trustees Report.

The NAMD said state Medicaid programs shouldn't be responsible for the fiscal sustainability of Medicare, especially when spending is being driven by policies beyond state control, like rising drug prices and general health spending. The letter is the latest attempt by advocacy organizations and stakeholders (including most recently health insurance groups and AARP) to persuade lawmakers to intervene to prevent, or at least blunt the impact of, the expected premium and deductible spike.

“Congress should develop a mechanism for keeping the impact on states predictable, reasonable, and sustainable,” the NAMD said in the letter to the Senate Finance and House Energy and Commerce and Ways and Means committees. “Cost savings within the Medicare program itself should be the primary contributor to solving its fiscal troubles, not cross-subsidizations from the Medicaid program.”

State Impact

The Centers for Medicare & Medicaid Services is expected to announce the 2016 Part B premium and deductible levels in the coming weeks. The projected premium increase wouldn't affect 70 percent of beneficiaries who fall under the “hold harmless” provision in the Social Security Act. The 30 percent of beneficiaries not covered by the provision would bear the brunt of the increase.

According to an analysis by the Federal Funds Information for States (FFIS), if the hold harmless provision is triggered and monthly premiums for dual-eligibles are $159.30, the state share of Medicaid would increase by approximately $2.3 billion in 2016.

The NAMD said the timing of the increase—which comes in the middle of most state fiscal years, and in some cases biennial budgets—“further exacerbates the challenge for state budgets and Medicaid leadership. On a more fundamental level, we question the policy reasoning for making the states, via their Medicaid programs, responsible for Medicare’s fiscal solvency. States are not in a position to influence Medicare policies or spending in any meaningful way, yet are nonetheless accountable for providing significant contributions to the Medicare trust fund.”

Cost of Living

The majority of beneficiaries' increase in the Part B premium is limited to the increase in an individual’s Social Security or Railroad Retirement Board retirement or disability benefit. Because no cost of living adjustment (COLA) is expected for Social Security in 2016, their Medicare Part B premium will remain stable at $104.90. The COLA will be announced Oct. 15. It will then be up to Health and Human Services Secretary Sylvia Mathews Burwell to announce the increase in the Part B premium, according to speakers at an Oct. 14 briefing on Medicare sponsored by the Alliance for Health Reform.

Burwell “may have some flexibility in determining adequate contingency or reserves,” according to one of the speakers, Tricia Neuman, senior vice president and director of the Program on Medicare Policy at the Kaiser Family Foundation. “But it'll still result in a pretty big increase.”

The secretary has to very careful when she sets the premium, Sean Cavanaugh, deputy administrator and director of the Center for Medicare at the Centers for Medicare & Medicaid Services, said.

If she sets it too low and expenses exceed revenue, there is no mechanism to fix that and Congress would have to intervene, he said.

Democratic Bills

Bills have been introduced in both the House and Senate to freeze 2016 Part B premiums at their current levels. The Senate bill (S. 2148) was introduced by Sen. Ron Wyden (D-Ore.), ranking member of the Senate Finance Committee. It has nine Democratic but no Republican co-sponsors.

The House version of the bill (H.R. 3696) was introduced by Rep. Dina Titus (D-Nev.). That bill also has no Republican co-sponsors. Republicans want the legislation, which could cost as much as $7.5 billion, to be offset. Thus far, no pay-fors have been publicly discussed.

To contact the reporter on this story: Nathaniel Weixel in Washington at nweixel@bna.com

To contact the editor responsible for this story: Janey Cohen at jcohen@bna.com