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Drug Benefit May Cost More

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By KEVIN FREKING, The Associated Press

Published: February 16, 2008

WASHINGTON - The Bush administration will ask Congress to increase the monthly premiums paid by wealthier Medicare beneficiaries for prescription drug coverage, officials said Friday.

The administration's proposal is part of a first-of-its-kind response to a warning about Medicare's strain on the federal treasury.

Even though Congress passed a law requiring the president to submit such cost-saving proposals, its prospects for passage are dim.

The legislation being offered would reduce the government subsidy for wealthier beneficiaries participating in the Medicare drug program. As a result, individuals making $82,000 a year, or married beneficiaries earning more than $164,000 a year, would pay higher premiums. It is not clear exactly how much they would go up.

The income thresholds would not be indexed for inflation, so more and more people would eventually pay more for the drug benefit. The higher premiums would affect about 4.5 percent of beneficiaries in 2009.

Bush's proposal also includes limits on non-economic and punitive damages awarded in medical malpractice cases.

In addition, it gives the secretary of the Department of Health and Human Services authority to set up a reimbursement system that pays health care providers based partially on the quality of their work. Medicare now pays a set fee for a particular service, regardless of quality.

The wide-ranging proposal is designed to keep Medicare from relying so much on the general treasury. The law requires the president to propose such legislation once Medicare's Board of Trustees projects the entitlement program will soon rely on general revenue for more than 45 percent of its funding. That projection occurred for the second consecutive time last year.
Advocacy group AARP said the proposal to increase premiums for the wealthiest simply shifts more costs onto the elderly and disabled. However, the organization liked the focus on faster adoption of electronic health records and paying for high-quality care.

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