2016-10-24 National Governors Association

Medicare Part B

The Honorable Paul Ryan
Speaker
U.S. House of Representatives
Washington, D.C. 20515

The Honorable Nancy Pelosi
Democrat Leader
U.S. House of Representatives
Washington, D.C. 20515

The Honorable Mitch McConnell
Majority Leader
U.S. Senate
Washington, D.C. 20510

The Honorable Harry Reid
Democratic Leader
U.S. Senate
Washington, D.C. 20510

Dear Speaker Ryan, Leader Pelosi, Majority Leader McConnell and Leader Reid:

Governors call on Congress to find a fiscally responsible solution to help mitigate the potential increase in Medicare Part B premiums for states in 2017.

The Social Security Administration (SSA) announced a 0.3 percent Social Security cost-of-living adjustment (COLA) in 2017. This incremental increase will trigger the “hold harmless” provision in the Social Security Act. As you are aware, the hold harmless provision protects nearly 70 percent of beneficiaries from premium increases that exceed COLA increases. The potential Part B premium hike will be spread to the remaining beneficiaries to ensure premiums cover 25 percent of program costs, as required by law. Beneficiaries dually eligible for Medicaid and Medicare make up most of those not covered by the hold harmless provision.

State Medicaid programs will be forced to cover the premium increase for dual eligibles. Previous estimates – using a lower projected COLA – predicted Part B premiums will increase 22 percent totaling a $1.1 billion cost shift to states. i This additional burden may force states to suspend innovative projects or make tough decisions regarding their Medicaid programs. States may have to subsidize federal programs at the expense of their own.

Governors were in the same situation last fall when the SSA announced there would be no COLA for 2016. Congress acted late last year and amended the Bipartisan Budget Act of 2015 to mitigate the premium spike. However, the amendment only accounted for a zero percent COLA, it did not consider incremental increases. We ask that as Congress addresses this issue they look for long-term solutions to avoid creating a perennial state concern.

States balance their budgets relying on the federal government to adhere to their obligations and should not be expected to cover federal programs. The cost of protecting Medicare beneficiaries should be borne by the federal government rather than placed on the backs of states.

Sincerely,

Governor Peter Shumlin
Chair
Health and Human Services Committee

Governor Charlie Baker
Vice Chair
Health and Human Services Committee

 

i. Tomsic, T. (2016, August 25). Medicare Part B Premiums Could Increase State Costs by $1.1 billion in 2017 (Issue brief No. 16-39). Retrieved October 18, 2016, from FFIS website: http://www.ffis.org/node/4148 (report used .2 percent COLA increase)