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AARP Calls on Congress to Oppose Increases in Medicare Premiums

“Raising premiums does nothing to address the problem of rising health costs”

December 9, 2011

AARP Media Relations, 202-434-2560

AARP Calls on Congress to Oppose Increases in Medicare Premiums

“Raising premiums does nothing to address the problem of rising health costs”

WASHINGTON – AARP Chief Executive Officer A. Barry Rand today sent a letter to members of Congress, urging them to oppose an increase in premiums for higher-income people in Medicare and to prevent a physician pay cut to help keep doctors in the Medicare program in any final legislative package.

Raising premiums for higher-income Medicare beneficiaries ignores the fact that these individuals have already paid more into the program through higher payroll and income taxes, and are already subject to higher-income Medicare Part B and D premiums. And unless Congress acts by the end of the year to prevent the nearly 30 percent reduction in Medicare physician payments, more physicians may choose to no longer take Medicare patients.

Rand’s letter follows:

Dear Representative:

On behalf of our members, AARP urges you to oppose inclusion of an increase in the higher income premium surtax for Medicare beneficiaries or reductions to affordable health care subsidies to fund the package containing the payroll tax holiday extension and other measures.

Medicare Income-Relating Proposal

The proposal asks seniors with incomes at $80,000 and above to pay for a package that includes a tax break for the entire working population, regardless of income level. It makes little sense to tax higher income Medicare beneficiaries to fund a stimulus tax relief measure for workers, including higher income workers, and is particularly problematic given that Medicare beneficiaries receive no direct benefit.

Further, the Medicare program is income related multiple times already. There is no cap on income for purposes of the Medicare payroll tax, thus higher income earners already contribute more to the program. In addition, seniors currently pay separate income related premiums for both Medicare Part B and Part D. Further, the Medicare program also receives income from the taxation of better-off seniors’ Social Security benefits. Finally, seniors who continue to work (a major reason why seniors hit the threshold in the first place) continue to pay the Medicare payroll tax, and a portion of seniors’ income taxes helps fund the Medicare program. The placement of an additional surtax on higher income beneficiaries is unwarranted, and is simply a further disincentive to work and save.

Income relating is also problematic for new Medicare enrollees, since the Medicare income-related determination relies on the beneficiary’s tax return from the prior year (which reports income from the year before). Many new retirees, whose income is likely to have dropped significantly from their working years, would be subject to even more unaffordable higher income-related premiums based on their previous wages, not their current financial situation.

Further income relating may also result in higher income beneficiaries leaving the Medicare program. This would worsen the Medicare risk pool, leaving more costly beneficiaries in the Medicare program and thus raising costs for everyone else. Finally, raising premiums does nothing to address the fundamental problem of rising health costs. Rather than simply shift more costs to beneficiaries, we should be adopting measures to help improve health care delivery and lower health costs throughout the health care system.

Medicare Physician Payment Policies

Our members, regardless of political affiliation, tell us they want Congress to find a bipartisan and fiscally responsible solution to keep doctors in the Medicare program. They remain concerned they will lose access to their doctors and future retirees will not be able to get the care they need. Unless Congress acts by the end of the year, physicians who treat Medicare beneficiaries will face a near 30 percent reduction in their Medicare reimbursements. More physicians may choose to no longer take Medicare patients due to this constant uncertainty and dramatic cuts to their payments.

As Congress moves forward in developing an improved physician payment system, we urge changes to payment policies that emphasize value over volume and improve outcomes and the quality of care for Medicare beneficiaries. It is also important to remember that Medicare beneficiaries’ premiums and cost-sharing are directly tied to Part B program costs. Beneficiaries -- who typically spend nearly 20 percent of their income on health care -- pay for 25% of part B program costs, and already absorb an increase in out of pocket costs tied to higher physician reimbursement.

Health Care Insurance Subsidies

AARP supports health insurance Exchanges subsidies to individuals up to 400 percent of the federal poverty level. The subsidies and their proper administration are a critical element in assuring affordability of quality healthcare coverage for individuals and families. Without these subsidies, many of our members will not be able to afford coverage or the cost sharing for covered care. We believe that efforts to change percentage limits or decrease the subsidy levels will erode the affordability protection of the credits, and will mean that over time more people will find insurance unaffordable.

Unemployment Insurance

Older workers age 55 and older are out of work an average of 58.2 weeks, longer periods of unemployment than for younger workers. An extension of unemployment benefits would greatly assist older workers who have lost their jobs and depend on extended unemployment benefits during this period of time.


A. Barry Rand

For more information, please contact AARP Media Relations by phone (202-434-2560) or by email (

AARP is a nonprofit, nonpartisan organization with a membership that helps people 50+ have independence, choice and control in ways that are beneficial and affordable to them and society as a whole. AARP does not endorse candidates for public office or make contributions to either political campaigns or candidates. We produce AARP The Magazine, the definitive voice for 50+ Americans and the world's largest-circulation magazine with nearly 35 million readers; AARP Bulletin, the go-to news source for AARP's millions of members and Americans 50+; AARP VIVA, the only bilingual U.S. publication dedicated exclusively to the 50+ Hispanic community; and our website, AARP Foundation is an affiliated charity that provides security, protection, and empowerment to older persons in need with support from thousands of volunteers, donors, and sponsors. We have staffed offices in all 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands.

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