If you did well in your career and have retired to enjoy the benefits of your hard work, watch your wallets. High-income seniors, among others, may be hit with the largest increase in the history of Medicare.
That news Thursday arrived at the same time as did the announcement that 60 million people on Social Security will not receive a cost-of-living increase in their 2016 benefit.
Big government giveth, and big government taketh away.
It’s similar to the news on the debt and deficit coming out of the Treasury Department this week. While the United States budget deficit fell to its lowest level in eight years in the fiscal year that ended in September, the federal debt crept up to the highest it’s been as a share of the economy since World War II.
But back to Medicare.
Unless congressional action changes things, about 30 percent of recipients could see premium increases of up to 52 percent. They are the ones not protected by a “hold harmless” provision that says Medicare premium increases can’t reduce the net Social Security check of average recipients. So, since Social Security benefits aren’t rising, neither are Medicare premiums.
But a separate law provides that premiums paid by all Medicare recipients combined must cover 25 percent of the cost of Medicare Part B, which pays for physician and outpatient services. So that puts the burden on the 30 percent, about 15 million people.
The high-income seniors – defined by the government as single persons with a modified adjusted gross income (AGI) of $85,000 or more and couples with an AGI of $170,000 or more – already pay a graduated premium surcharge. With the potential increases, their monthly premiums could jump from, for example, $146.90 in 2015 to $223 in 2016 for singles with an AGI of $85,000.
But seniors aren’t the only ones who’ll receive a hit. Beneficiaries who are new to Medicare in 2016 will feel the bump, and states will be forced to pony up more for the poorest Medicare recipients, who have their premiums paid by state Medicaid programs instead of being taken out of their Social Security checks.
The last two times there was no Social Security benefit hike – 2010 and 2011 – Democrats, who held both houses of Congress, did not prevent the quirky Medicare increases (though they were 15 percent in 2010 and 4.4 percent in 2011).
Negotiations already are underway in Congress for a possible fix, and we believe the large rise makes at least a reduction in the increase necessary and for the future a patch to be put in place that keeps this aberration from happening again.
Seniors and other organizations plan to lobby the dual cruelty, claiming that the falling energy prices responsible for low overall inflation and no Social Security increase help them least because they drive less. Meanwhile, they say, prices for food, medical care and many other necessary things have gone up.
The lack of an increase also hits seniors who must or want to work. When monthly benefits do not go up, neither does the amount recipients under the age of 66 can earn without having their benefits docked.
As to the budget deficit, $439 billion in the red for 2015 is certainly better than $483 billion in 2014 and the trillion-dollar deficits of 2009-2012. The slowly improving economy and the 2011 budget sequester deal are responsible for that improvement. But the deficits are expected to climb back over $1 trillion in the next decade.
Meanwhile, the public portion of the federal debt – as opposed to the portion that is borrowed out of government trust funds such as the Social Security and Medicare trust funds – has more than doubled since Barack Obama became president in 2009. When he took office on Jan. 20, 2009, it was $6.3 trillion. Last week, it was a shade more than $13 trillion, or $57,431.65 for every household. In comparison, the average household income for Chattanooga is $59,388.
Over the same time, the overall debt has jumped from $10.6 trillion to nearly $18.2 trillion, and the gross federal debt is now 103 percent of annual gross domestic product.
Until revenue significantly outpaces spending, or spending is further reined in, the country will not be able to prudently spend on the things it needs now like infrastructure improvements, education enhancements or higher wages.
These issues should be part of presidential campaign discussions for both parties. If a candidate is serious about how to improve the economic lot of the country, he or she will discuss them.