WASHINGTON – Medicare (search) recipients whose premiums for doctor visits cannot rise more than the annual cost-of-living adjustments in their Social Security (search) checks won't enjoy that same protection when it comes to their medicine.
Democrats have found that the Republican-written prescription drug benefit, signed into law last year and scheduled to take effect in 2006, has no premium caps tied to Social Security COLAs (search).
"This is kind of a sneak attack on Social Security benefits," Rep. Fortney "Pete" Stark, D-Calif., said Wednesday at a news conference.
The annual Social Security increase tied to inflation is designed to prevent the erosion of seniors' purchasing power. The protection in the Part B premium is especially important for low-income seniors.
"Seniors are exposed to the possibility that large increase in medical costs, especially prescription drug costs, could eat up a large piece of their Social Security COLA and, for some, even reduce the size of their Social Security check," Democrats on Congress' Joint Economic Committee said in a new report.
The issue has added significance because the new law ties the rise in drug insurance premiums to drug price inflation, while increases in Social Security are pegged to the overall rate of inflation.
Drug prices have risen far faster than the Consumer Price Index, the most closely watched inflation measure.
"Of the many problems with the Republican drug bill, this is one of the worst. It's a backdoor scheme that will decimate the Social Security COLAs of millions of Americans," Senate Democratic leader Tom Daschle of South Dakota said.
Daschle, House Democratic leader Nancy Pelosi of California and others are introducing legislation to extend the protection to drug insurance premiums. It would also limit combined increases in premiums Medicare Part B, for doctor visits and other non-hospital costs, and Part D, the new drug coverage, to 25 percent of Social Security recipients' inflation adjustments.
The legislation would allow seniors to retain at least 75 percent of their COLA to cover jumps in prices for food, utilities and housing. The Democrats it would cost $27 billion over 10 years.
Health and Human Services Department spokesman Bill Pierce said: "If not for the Medicare modernization act, seniors would continue to pay the highest prices for drugs with no help in sight. This law offers real hope while Democrats only offer rhetoric.
"No longer will beneficiaries without drug coverage go it alone in buying their prescriptions," Pierce said. "Medicare will be with them helping to reduce their costs from hundreds and thousands of dollars to nearly nothing for low-income seniors."
As it stands now, most Social Security recipients keep most of their COLA, committee Democrats said. Only those who receive the smallest monthly benefit find that their entire adjustment is used to pay higher Medicare premiums.
In 2004, for example, the $7.90 rise in monthly Medicare premiums for doctor visits and other non-hospital care consumed the entire COLA for the estimated 1.4 million people who receive no more than $384 a month from Social Security, the Democrats' report said.
Social Security checks increased by 2.1 percent this year, an extra $19 a month for an average retiree. Medicare premiums rose by 13.5 percent.
Next year's increase could be the largest ever, Medicare's trustees reported in March. Monthly Part B premiums could rise 17 percent in 2005, from $66.60 to $78.10.
The Democrats said Medicare insurance premiums will take a growing share of COLAs so that by 2014, nearly two-thirds of Social Security recipients will spend at least 25 percent of their COLA on premium increases.