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the ESA was in force, the rate of physicians accepting assignment fell more precipitously than prior and subsequent periods

(11 percent).

Part B Premium (Anticipated savings: $9.3 billion between
FYs 1984 and 1988: Increase the Part B premium so that premiums
cover 35 percent of costs, rather than 25 percent of costs
(as set under TEFRA)

Implementation of this budget proposal would result in an increase in the amount now paid by Medicare recipients for the Part B premium from a current rate of $146.00 per annum to $400.00 per annum by 1988. While under the Administration's proposal the annual premium amount would increase incrementally between 1984 and 1988, Medicare recipients can look forward to paying roughly 172 percent more for Part B coverage in 1988 than they are presently paying. Indeed, under this proposal, Medicare recipients, already burdened by a steady rise in other out-of-pocket medical

expenditures,1/ will be expected to absorb a 60 percent increase

in the cost of the Part B premium between 1983 and 1985 alone.

1/ As reflected in increases in the cost of Medigap premiums, in the cost of services and supplies not covered by Medicare, in increases in physicians' charges not allowed by Medicare but collectible from beneficiaries, in annual increases in the Part A deductible, and in increased co-insurance expenditures under both Parts A and B.

The table below projects the monthly and annual costs of the Part B premium between 1983 and 1988:2/

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2/ Based on data provided by Part B Actuaries, HCFA.

Figures

shown in the table were obtained by interpolating the July-to-June HCFA data to accommodate the January-to-December schedule of premium increases proposed by the Administration.

Part B deductible, estimated savings FY 84: $46 million

The Administration proposes to adjust the Part B deductible annually according to movement in the Medicare Economic Index (MEI) for Physicians' Services. HCFA estimates that the MEI will increase 6.4% in calendar year 1984. If such a projection

is correct, the cost of the Medicare Part B deductible would
rise from its current rate of $75 per annum to roughly
$80 per annum.

It should be noted, however, that the MEI has risen
by more than 8% annually since 1980, and has dropped at only
one point (between 1976 and 1977) since actuaries first began
maintaining the index in 1976. Further, the MEI has risen
an average of 8% per annum since 1976. Had the Medicare
Part B deductible, set at $60 per annum in 1976, been tied to
fluctuations in the MEI, the current amount of the deductible
would be roughly $100 per annum or 25% more than the present
deductible amount. Enactment of this proposal portends
unpredictable and potentially explosive increases in out-
of-pocket costs for Medicare patients.

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In addition to $1.45 billion in Medicaid cuts already on the books for FY 1984, the Administration is seeking further Medicaid cuts of $293 million in FY 1984, for a total of almost $1.75 billion in Medicaid cuts in FY 1984. Clearly such cuts will further restrict the poor, elderly and disabled from essential medical care.

AARP firmly opposes the Administration's proposal

to require states to impose copayments for all Medicaid services except nursing home care. Research sponsored by the Health Care Financing Administration (HCFA) clearly shows that the poor and near poor experience high levels of out-of-pocket costs for health care. "Out-of-pocket costs for the poor and near poor are as high or higher than for higher income groups. Almost all persons in families with out-of-pocket expenses greater than 15% of family income had family incomes below 200% of the official poverty level." (See Out-of-Pocket Health Expenses for

Medicaid and Other Poor and Near Poor Persons in 1980, Howell, Corder & Dobson, January 1983.) It is a cruel hoax for the Administration to seek budget savings from this vulnerable segment of the population.

AARP also opposes the Administration's proposal to permanently reduce federal matching payments to states by 3% beginning in 1985. The states have already drastically cut Medicaid eligibility and services to meet the steep cuts in federal matching funds for Medicaid enacted under the Omnibus

Reconciliation Act of 1981 (3% in FY 82, 3.5% in FY 83 and 4.5% in FY 84). Again targeting the most vulnerable in society, including nursing home patients, for such an unjustified, irrational cut is not only unfair, but poor public policy.

Finally, the Association strongly opposes the Administration's 17% reduction in funds supporting state survey and certification of nursing homes. According to the Administration's own projection, the funds budgeted will only pay for surveying less than 80% of Medicaid facilities in 1984. This budget proposal is a direct challenge to the Congress because of the Congressional moratorium placed on the Administration's regulations concerning the survey and certification of nursing homes. What the Administration has been unable to achieve by regulation, they are attempting through the budget. The Administration's arguments in support of reducing survey and certification were wrong last year when Congress placed the moratorium and they are wrong now. Congress must not allow the Administration to bypass the substantive objections resulting in the Congressional moratorium on survey and

certification regulations without correcting the deficiencies

therein.

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