The Medicare deal pays for itself by creating a more modest increase in premiums for 30 percent of seniors in 2016, but then adding an additional $3 to those seniors’ monthly premiums until the “loan” from the Federal Treasury to the Supplementary Medical Insurance Trust Fund is paid off. Medicare beneficiaries who currently pay higher income-related premiums—for example, wealthier seniors or those whose premiums are paid by Medicaid—will pay more than an additional $3 a month to repay the loan.
“It’s basically spreading that increase over the next nine years,” said Loren Adler, a research director at the Committee for a Responsible Federal Budget.
The deal came only after significant wrangling. House Minority Leader Nancy Pelosi insisted the fix be included in the budget deal after House leadership failed to address the problem earlier in the month. Pelosi had also brought up the possibility of including the fix in the continuing resolution that passed both chambers in late September, but that never happened.
On Friday, three days before the budget deal was announced, Republicans proposed a package that did not include a Part B fix. Intense negotiations continued over the weekend, and the fix was slipped into the deal by Monday night.
“We’re very pleased to have worked ... on stopping a sharp increase in Medicare Part B payments for our seniors,” Pelosi said on Thursday. “The security of our country, the growth of our economy, the financial stability of our seniors and people with disabilities—for the full faith and credit of the United States of America, we’re very proud.”
Under the budget deal, seniors not held harmless will pay $120 a month, while the majority of beneficiaries will pay the 2015 rate for their coverage, $104.90. Without the deal, premiums for non-held harmless seniors would have spiked to $159.30.
The 30 percent of seniors who are not held harmless include high-income beneficiaries, new beneficiaries, beneficiaries who have not started receiving Social Security, those whose premiums are paid by Medicaid, and certain state and local employees who do not participate in Social Security.
Earlier this month, Sen. Ron Wyden, ranking member of the Senate Finance Committee, introduced legislation that would have held all premiums at $104.90, but it did not include an offset to prevent it from adding to the budget deficit. The bill was cosponsored by 28 Democrats and both independent senators.
Still, Democrats seem pleased with the solution reached in the budget deal: “It’s very good,” said Sen. Debbie Stabenow, a Michigan Democrat. “It basically stops what would have been at least a 50 percent increase in Medicare.”