26 FIGURE 3.3 - ELDERLY OUT-OF-POCKET (CONSUMER) - In the case of the Medicare Part A hospital deductible, the increases have been substantial. (See Figure 3.4) As one indicator, the hospital deductible was $124 in 1977 roughly equivalent to one-half month's Social Security payment ($122) in that same year. Eleven years later, that same one-half month Social Security payment had grown to $269, a little over twice the 1977 level. During the same period, the Medicare Part A hospital deductible jumped to $540 over four times the level in 1977 and twice the one-half month Social Security payment for 1988. 27 FIGURE 3.4 MEDICARE PART A HOSPITAL DEDUCTIBLE AS COMPARED TO ONE-HALF AVERAGE MONTHLY SOCIAL SECURITY BENEFIT FOR RETIRED WORKERS FOR 1977 THROUGH 1988. Medicare Hospital Deductible As Compared A similar pattern holds for the Medicare Part B premium as compared to Social Security payments. (See Figure 3.5) In 1977, the annual Part B premium was $92, substantially less than one-half of the monthly Social Security payment for 1977. By 1988, the annual Part B premium had risen to $298, substantially more than onehalf of the monthly Social Security payment. 28 FIGURE 3.5 Looking ahead, the President's 1991 Budget proposes a permanent increase in the Part B premium by tying it to increases in overall Part B costs. Under current law, the premium cannot increase faster than the Social Security COLA and is estimated to be $34.80 per month in 1995. If the President's proposal is enacted into law, the Medicare Part B premium would reach $47 per month in 1995, assuming the President's other Part B cuts were enacted. If the President's other Part B cuts were not enacted, the Part B premium would be higher at $50 per month. 29 Over the 1991-95 period, the President's proposal would increase the Part B premium much faster than the Social Security COLA. Under the President's best case, where he gets all of his other Part B cuts, the premium would rise an average of 9.6 percent annually as compared to average Social Security COLAs of 3.7 percent. If Medicare Part B is not cut as he proposes, the premium would rise an average of 10.0 percent annually. In both cases, the elderly lose ground as Social Security payments grow more slowly than the Part B premium. Another source of concern is over the access and quality consequences for the elderly if the President does get his other Medicare Part B and Part A cuts. MEDICAL CARE PRICES AS COMPARED TO ELDERLY INCOME. Most of the previous analysis has focused on senior citizens because they are most likely to have the combination of substantial health and long term care costs and relatively fixed incomes. However, when medical prices are charted against elderly income, a picture is drawn that also applies to persons of any age who have major health costs and relatively fixed incomes. As detailed earlier, medical price increases for the past seven years are much higher than increases in several indicators of elderly income. (See Figure 3.6) On average between 1983 and 1989, medical prices rose twice as fast as did the average monthly Social Security payment and the Consumer Price Index (CPI-W), the basis for setting Social Security COLAs. For the same period, growth in medical price also easily outdistanced growth in mean income for those aged 65 and older and median income for those aged 70 and older. |