Part B is the voluntary portion of Medicare which covers doctors’ services, diagnostic tests and hospital outpatient services for more than 42 million people 65 and older or disabled. The current monthly premium is $88.50. In January 2007, it will increase to $93.50.
Also in January, what Medicare calls a “surcharge” will be instituted for the first time. A more accurate description is “means test” as the premium will increase further for single people with annual incomes of more than $80,000 and for couples filing joint tax returns with annual incomes of $160,000 or more.
The surcharge went almost unnoticed when it was included in the Part D (prescription drug coverage) legislation of 2003 and now, with less than four months to go until it is implemented, outcries are being heard across the land.
Here is a chart (blatantly stolen from The New York Times story published last week) of the means-test surcharges:
Opponents of the surcharge argue that it is unfair, that it turns a social insurance program into a welfare program, and Rep. Nita Lowey (Dem., New York) has introduced a bill to repeal the surcharge. It is worth noting that Ms. Lowey’s 18th Congressional District, just north of Manhattan, includes some of the highest-income bedroom communities in the U.S.
Another argument against the surcharge is that will drive high-income beneficiaries out of the Medicare program and into private insurance. That seems to be a specious argument if it is assumed that people at all income levels wish to keep their personal costs down.
Even the highest surcharged premium – $162.10 per month or $1945.20 annually – is pocket change for a single person with an income above $150,000 a year. For a couple, the total would be $3890.40. I became one of the uninsured in the months before I qualified for Medicare when my private healthcare premium shot up to $900 a month, so I doubt anyone can beat $162.10 in the private sector.
Even at the lowest income level at which the surcharge is assessed - $80,001 for a single person, $160,001 for a couple – the annual premium is $1272 and $2544 respectively. That’s 1.59 percent (single) and 3.18 percent (couples) of income. A bargain.
Some have suggested that the surcharges be indexed to local cost of living. That may be a good idea but in Manhattan, one of the most expensive cities in the U.S., I know plenty of people who earn less than $80,000 a year. They aren’t living high on the hog, but they get by, so I think the $80,000 low-end surcharge is reasonable.
According to Medicare, the surcharge will affect 3.5 percent of beneficiaries, about 1.5 million people. Federal health officials estimate that 9,000 people will drop out of Medicare because of the surcharge (what are they thinking?) and more in 2009, when the surcharges are further increased.
But there is a larger point to be made. Medicare is already stretched to the limits of its means and when the baby boomers begin signing on in five years, the program will be springing leaks. The money must be found to support the program and a small surcharge – less than the cost of a high-end HD television set - is little enough for the haves to give up to help the have-nots.
As with our graduated income tax, it has long been a tenet of American social justice that those who have more, pay more into the system. The haves must ask themselves how much money is enough. And we must all ask ourselves what kind of people are we if we do not provide even basic healthcare to those who cannot afford it.
Long term, a better solution is needed. Universal health coverage for everyone of every age, funded in an entirely different manner, should be adopted, as every other nation in the developed world has. But until we can elect something better than the corrupt, do-nothing Congress we have, which is concerned only with reducing taxes for the rich, this surcharge is the best we’ve got.
At the income levels at which the surcharge has been set, no one can claim to be burdened.