WASHINGTON - The Bush administration will ask Congress to increase the monthly premiums that wealthier Medicare beneficiaries pay 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 Service authority to set up a reimbursement system that pays health care providers based partially on the quality of their work. Now, Medicare 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.
Under the law, Bush was required to respond to the trustees' warning within 15 days of submitting his 2009 budget. Congress is also required to consider the legislation on an expedited basis.
Republicans say the "45 percent trigger" gives Congress a unique chance to focus on Medicare's growing financial problems.
"This is an emergency that grows by the day," said Health and Human Services Secretary Mike Leavitt. "This trigger is an important part of the discussion Congress can and must exercise."
The Medicare program provides health coverage to about 44 million elderly and disabled people. Medicare spending is expected to reach $425 billion this year. The program is growing at a rate of about 7 percent a year, which is a threat to other essential programs, such as defense, education and roads, GOP lawmakers said.
"This proposal provides a fresh opportunity to begin making the decisions necessary to ensure the program remains viable for generations to come," said House Minority Leader John Boehner, R-Ohio.
But Democratic lawmakers have called the 45-percent threshold arbitrary and designed to take certain options off the table when dealing with Medicare, namely higher income taxes.
"The trigger was created as a political ploy to foster a panic that Medicare is unsustainable," said Rep. Pete Stark, D-Calif.
Democrats also have offered ways to slow Medicare spending. But their preference is to trim payments to private insurers serving the elderly through a program called Medicare Advantage. The administration has opposed any substantial cuts to the insurers, so the two sides are basically at a standstill over how to slow the program's growth.
Administration officials said the higher premiums charged to wealthier beneficiaries for drug coverage would save $900 million next year and about $3.1 billion over five years. The amount is just enough that general revenues would not make up more than 45 percent of Medicare's funding for 2013.
The advocacy group AARP said the proposal to increase premiums for the wealthiest beneficiaries did nothing to curb health care costs and simply shifted 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.
"We urge Congress to focus on these types of measures that will reduce, not simply shift, our nation's health care spending," said David Sloane, the organization's advocacy director.
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