ROBERT M. NEELD, Democrat
Candidate for U.S. Congress

Record Medicare Fee Hike Predicted

By Larry Lipman, Palm Beach Post Washington Bureau
Friday, March 26, 2004

WASHINGTON -- Medicare beneficiaries could face a 17 percent premium increase next year, followed by several more years of substantial increases, the program's chief actuary said Thursday.

The projected $11.50-a-month increase, to $78.10 from the current $66.60 level, would be the largest since Medicare premiums began at $3 a month in 1967. The exact increase will be announced this fall.

Medicare chief actuary Richard Foster said the primary cause of the increase would be Congress' decision last year to block a scheduled 4.5 percent cut in doctor fees for 2004 and 2005. Instead, as part of the Medicare prescription drug bill, Congress mandated that doctor payments increase by 1.5 percent each year.

Foster made the comments during a panel discussion sponsored by the American Enterprise Institute. The projection was contained in an appendix to the annual Medicare trustees report issued Tuesday.

The trustees also projected that monthly premiums would increase to $80 in 2006, $82 in 2007 and $85.60 in 2008.

But Foster said those estimates were based on a formula in the Medicare law that would cut physician payments by 5 percent each year between 2006 and 2012.

"That's current law, and there is no way it can happen," Foster said, predicting that Congress will again intervene to prevent a reduction in doctor payments.

The result, he said, would be premium increases far greater than predicted in the report.

Also beginning in 2007, beneficiaries with incomes of more than $80,000 a year will begin paying higher premiums. The increased premiums will vary on a sliding scale for income levels between $80,000 and $200,000.

Foster has been at the center of a recent controversy over last year's prescription drug law after he recently said that Medicare's top administrator threatened to fire him last year if he revealed projections that the prescription drug bill's final cost would be about $130 billion higher than the figure publicly being used by the Bush administration.

Foster said Thursday that Thomas Scully, who was Medicare's administrator at the time, also ordered him to withhold information on a controversial provision of the Medicare bill that would have forced the traditional Medicare program to compete against managed care plans in setting premiums.

The provision would have raised premiums for beneficiaries in the traditional program by 25 percent, Foster said.

"Scully didn't want that result to get out because the Democrats would use it to... kill the bill," Foster said. The provision was ultimately reduced to a series of demonstration projects.

Scully did not return a call to his office Thursday.

On Wednesday, Foster told the House Ways and Means Committee that he had informed White House and Office of Management and Budget officials in June that the Medicare bills then being considered could cost $500 billion to $600 billion over 10 years. His final estimate, released in December after the bill became law, was $534 billion.

The accusations have sparked investigations by the Health and Human Services Department's inspector general and the General Accounting Office. Democrats have accused the Bush administration of a coverup in withholding the cost estimates.

Democrats on the Republican-controlled Ways and Means Committee called Thursday for Scully and White House health policy adviser Doug Badger to testify before the committee. A Democratic spokesman said the committee had to grant the hearing at some point but could delay scheduling it.

Meanwhile Thursday, Health and Human Services Secretary Tommy Thompson announced that 28 sponsors have been approved to sign up Medicare beneficiaries for drug discount cards beginning June 1.

The companies will compete for beneficiaries based on charges for the card and discounts the cards will provide. Medicare will provide information comparing the cost and benefits of the different cards late next month. The information will be available either on the agency's Web site, www. medicare.gov, or by calling (800) 633-4227.

larryl@coxnews.com