One way the "beautiful bill" does touch Medicare
Millions of poor seniors lost an easier path to help with costs
The White House has insisted that the “one big beautiful bill” does not touch Medicare benefits. And it’s true that no standard Medicare benefits are reduced or eliminated under the One Big Beautiful Bill Act (OBBBA).
But largely unnoticed is an OBBBA provision that suspends until 2034 an initiative intended to streamline enrollment in state-run Medicaid programs that help seniors who qualify get a hand paying for out-of-pocket Medicare costs.
That plan would have widened enrollment in Medicare Savings Programs (MSPs) by reducing the paperwork needed to sign up. Republicans opposed the plan, justifying their resistance as an effort to prevent waste and fraud. They are all about adding paperwork for verification, not making it easier to get benefits - even for people who clearly qualify. And there has never been any suggestion of widespread abuse of the MSP program.
More important, suspension of the streamlining rule will reduce federal Medicaid spending by $66 billion over 10 years because of lower enrollment, according to the Congressional Budget Office. In effect, the suspension funds the tax cuts going to upper income households - it effectively transfers $66 billion from the poor to the wealthy.
“What’s particularly insidious and cruel is that this was meant to benefit low income seniors to help them pay for their prescription drugs, the cost of their daily living, and increase the the the amount that they receive in their Social Security checks,” said Frederic Riccardi, president of the Medicare Rights Center.
MSPs cover the cost of premiums and other out-of-pocket expenses, and automatically enroll people in the federal Low Income Subsidy, which helps people pay for medicines under Medicare Part D. Only about 60 percent of eligible seniors are enrolled because they aren’t aware of them, and the plans have complex enrollment requirements.
We’re talking here about substantial financial help for people who are struggling.
The U.S. Census Bureau reported last month that the percentage of Americans aged 65 or older living in poverty rose in 2024 to 15 percent — up from 14.2 percent in 2023 and 10.7 percent in 2021 — the only age group that saw an increase in poverty.
Health care costs are a major culprit in that increase. Medicare Part B and D premiums and cost sharing account for nearly 25 percent of average monthly Social Security benefits, according to KFF — and that figure does not include other costs, such as dental care, long-term care or premiums for supplemental Medicare coverage, known as Medigap. Taking those costs into account, health care spending consumes 39 percent of Social Security benefits on average, KFF found.
Enrolling in an MSP and the Low Income Subsidy, which helps with prescription drug costs, can save an individual as much as $8,400 annually in Medicare premiums, deductibles, co-pays and other out-of-pocket costs, according to the Medicare Rights Center. Consider that one in four Medicare beneficiaries lives on less than $24,600 and you can see that this rule suspension is a huge blow.
The decision to suspend the streamlined enrollment plan comes at a time when Medicare costs are rising. The Part B premium is projected to rise 11.6 percent next year. That would consume most of the dollar amount of the Social Security cost-of-living adjustment received by low income seniors, which is projected to be around 2.7 percent.
Most experts also expect Part D prescription drug plan premiums to rise sharply next year. That’s because the administration scaled back a program aimed at holding down premium increases through subsidies paid to drug plan providers. (I’ll have more on those numbers later this fall when hard numbers become available, although right now it’s not clear how announcements about the COLA and premiums might be impacted by the federal government shutdown.)
Learn more about the MSP story in my latest column for The New York Times (gift link).
How does the government shutdown impact Social Security?
The Social Security Administration largely keeps functioning during federal government shutdowns. That’s because the agency’s funding is “mandatory” under federal law and already has been allocated for the year.
That means benefits continue to flow. You also can apply for benefits, either online, by phone or at agency field offices.
That’s not to say all is well at the field offices. Staffing cutbacks mean field offices continue to struggle with diminished workforces and low morale. People who need in-person help often wait weeks for assistance.
Tara Siegel Bernard of the New York Times put a spotlight recently on how that affects the most vulnerable Americans:
When Rebekah Walker noticed she was short on her July rent, it quickly became clear that her monthly disability payment never arrived from Social Security, as it had for the past 16 years.
The agency claimed in an online message that she had been overpaid by $48,609.60 — and she needed to pay it back.
Until she could prove otherwise, she was cut off.
Ms. Walker, who has complex heart abnormalities and one functioning lung, headed to her local Social Security office for answers, waiting about 30 minutes before they turned her away. The earliest appointment slot wasn’t for two weeks.
“At this point, I’m crying and I’m shaking,” said Ms. Walker, 41, who is divorced. “My rent is due that week.”
The agency says it is transforming itself into a “digital first” organization that also continues to serve people who need one-to-one help. But the real world experience shows that in-person service is suffering in ways that are hurting people.
A closer look at the shutdown fight over ACA policy premiums
One of the key weapons Democrats wield in the federal government shutdown is expiration of premium subsidies for Affordable Care Act policies. Older adults who buy health insurance on the ACA exchanges (because they have yet reached the Medicare eligibility age) would be hit especially hard if these subsidies are not restored.
The American Rescue Plan of 2021 expanded the premium tax credits that help people afford ACA premiums. The law increased tax credit amounts and extended eligibility to more middle-income households. When they passed the OBBBA, House Republicans rejected an amendment to extend these enhancements beyond December of this year.
If this is not reversed, premiums will jump across the board for 24.3 million Americans. But the impact on people age 50 and older will be especially severe. That’s because the ACA allows insurers to set premiums for this age group up to three times higher due to their higher risk profile (that is, they tend to consume more health care.)
For example, a 64-year old couple in Ohio earning $90,000 annually would go from paying $638 per month to $2,642 per month, according to analysis by Charles Gaba.
Maybe crazy numbers like that show why Republicans are signaling willingness to give on this issue in the shutdown talks?
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