Premiums for prescription drug coverage under Medicare Part D would
increase for Medicare beneficiaries who are more affluent, under legislation
proposed by President George Bush.
The president acted in response to warnings from Medicare trustees that by
2013 more than 45 percent of Medicare's spending will come from general tax
revenue, as opposed to dedicated payroll taxes and premiums paid by
Under a 2003 law, the White House must respond with legislation when
trustees issue that warning for two consecutive years. The first such warning
was announced in 2006, the second in April 2007.
According to the proposal, federal subsidies for single beneficiaries with
incomes greater than $82,000 and married beneficiaries with incomes greater
than $164,000 would be reduced and premiums increased for the purchase of
prescription drug coverage under Part D. Also included are proposals to
increase cost efficiency through improved health information technology and
performance reporting; incentives for providers to deliver, and beneficiaries
to choose, high-quality, low-cost health care; and transparency of pricing and
In a letter to House Speaker Nancy Pelosi (D-Calif.), Health and Human
Services Secretary Mike Leavitt outlined the legislaton.
"The Medicare program is on an unsustainable path, driven by two
principal factors: projected growth in its per-capita costs and increases in
the beneficiary population as a result of population aging," Leavitt
wrote. "Excess cost growth will not be brought under control until there
is comprehensive reform changing Medicare's underlying structure. The funding
warning is merely one near-term signal illuminating a small piece of a much
"That problem is an unsustainable design in which government controls
too many aspects of health care. In traditional fee-for-service Medicare, the
government decides what treatments are provided and what the price should be.
Until this system is modernized to offer greater choice and price
accountability to individual consumers, the program's finances will remain on
a path to insolvency."
"Left unchanged, within 35 years Medicare would eat up every bit of
the federal budget as we now know it," Leavitt said in a conference call
with reporters. "We know that's not likely to happen, so one of two
things will occur: we'll either raise taxes in some future Congress or... have
to do serious surgery to Medicare.... We're quickly moving away from the point
that we can solve this problem. We need to act on it."
Leavitt said the proposal to relate Part D premiums to income would save
$900 million in 2013 and nearly $3.2 billion over five years.
Other provisions are designed to reduce costs to Medicare associated with
medical liability suits. Among the strategies to accomplish this is the
establishment of a statute of limitations of three years after the date of
manifestation of injury or one year after the claimant discovers the injury,
whichever comes first; and a provision that lawsuits on behalf of minors under
age 6 must be commenced within three years of the manifestation of the injury
or prior to their eighth birthday, whichever provides the longer period.
The provisions related to income were included as part of Bush's budget
package released earlier this year.
"This legislative package, particularly if enacted in concert with
the president's budget, would take the first step of responding to the funding
warning in the Trustees' 2007 report," Leavitt wrote to Pelosi."
Perhaps more importantly, it would begin to address the long-term
challenge and lay the foundation for the comprehensive Medicare reforms that
are necessary to strengthen and improve the program for future