KHN Morning Briefing

Summaries of health policy coverage from major news organizations

Medicare Beneficiaries May Face Increased Financial Burdens

The Associated Press reports that six states are considering cutting drug help for seniors and disabled people through Medicare Part D because of the severity of the financial pressures. Nearly 27 million people nationally are in "the federal insurance plan that covers prescription drugs for seniors until the total bill reaches $2,700." After that point, seniors "hit what's commonly called the "doughnut hole," and must personally pay the drug bill until their out-of-pocket costs reach $4,350, at which point Medicare coverage resumes." For seniors in that gap, 16 states offer financial assistance while other states help to defray some of the premium costs associated with Medicare, the AP reports.

Rhode Island, South Carolina, Vermont, New York, Connecticut and Massachusetts have all considered cuts even though each has made different decisions. The AP notes that the savings "aren't huge" and account to less than 1 percent of the total budget in South Carolina and Rhode Island, noting that "eliminating the program in Rhode Island would save about $700,000 and affect around 8,000 people, while a proposal to scale back benefits in South Carolina would have trimmed roughly $7 million." The AP adds that, "Advocates for the elderly fear the cuts will force cash-strapped seniors to stop taking their medications, leading to serious health problems" (Henry, 5/27).

CQPolitics reports that "new Social Security recipients and upper-income seniors could face a steep increase in their monthly Medicare premiums for the next two years" and "millions more will see their finances squeezed if their premiums for Medicare Part D prescription drug coverage go up during that period," according to new analysis released Tuesday by the Kaiser Family Foundation.

The study "points out that Social Security and Medicare trustees project no cost-of-living adjustment (COLA) to Social Security benefits in 2010 and 2011, and only a tiny one in 2012. The COLA is pegged to an inflation index, and the economic recession has erased increases in the relevant index. This year, seniors received a 5.8 percent COLA, the largest in more than a quarter-century, but those days are gone for the near future." In the next two years, "monthly premiums for Medicare Part B coverage will increase sharply under existing law, which requires premiums to cover 25 percent of program costs" and "the projected absence of a COLA in the coming years could represent an added hardship for many recipients" (CQ Staff, 5/27).

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