Seniors, Doctors Face Tough Year Ahead

November 18, 2009

For seniors, Social Security checks will not increase and Medicare Advantage premiums are increasing 20%-60%. For doctors, the looming cut in Medicare fees scheduled for January 1 might actually happen this time.

For seniors, the first blow was the news that Social Security checks would not increase. Then, the 25% of Medicare beneficiaries enrolled in Medicare Advantage plans got their premium notices for next year, featuring increases of 20% to 60%. For doctors, the bad news is a looming cut in Medicare fees scheduled for January 1. Unlike previous years when Congress rode to the rescue, lawmakers seem stalemated over the issue this time around and any action on rolling back the cuts is still up in the air. The fee cuts would be bad news for seniors, too, who may have problems finding a doctor if the cuts prompt physicians to bail out of the Medicare program.

Without Congressional action, Medicare payments to doctors will drop by 21% in 2010. In previous years, the cuts have always been rescinded, often at the last minute, in an annual cliff-hanger scenario that many doctors have become tired of. The American Medical Association has lobbied for a change in the fee-setting process, favoring a system that would jettison the current formula and eliminate the yearly fee-cut debate. That effort hit a wall when the Senate rejected a motion to bring a bill that would have repealed the system to a floor vote. Opponents of the bill objected to its increased costs, estimated at $245 billion over 10 years, without any offsetting cuts in other programs.

The increases in Medicare Advantage premiums are due to a cut in funding to these HMO-type plans, which are partially subsidized by the federal government. Those cuts have already been made and are separate from a proposal contained in the healthcare reform bill that would cut funding to Medicare Advantage plans by an additional $130 billion over 10 years. If the bill is enacted, these funding cuts will start in 2013.