PRESIDENT PULLS 45% TRIGGER, INCREASES PRESCRIPTION DRUG PREMIUMS FOR MILLIONS

Last Friday, President Bush pulled the 45% trigger, responding to a law requiring him to propose legislation that reduces Medicare spending when the program is expected to be more than 45% funded by general government revenue for two years. The President's plan forces even higher costs on retirees by linking beneficiaries' Part D premium levels to their income, while maintaining overpayments to private insurance companies. The means-test will increase monthly premiums for 1.5 million seniors in 2009. Approximately 8% of Medicare Part D recipients, 3.7 million seniors, will be affected by 2018, since the income thresholds for increased premiums are not scheduled to rise with inflation. Additionally, the Office of the Actuary estimates that more than 800,000 beneficiaries will immediately drop their Medicare drug benefits if the legislation is approved, potentially raising costs for lower- and middle-income seniors. The proposal made no cuts to insurance industry programs like Medicare Advantage, which costs taxpayers an additional 12-19% more than traditional Medicare each year. Congress would have to act before the changes could become law. "If the goal is to reduce Medicare spending, eliminating Medicare Advantage overpayments is a much better place to start than increasing the premiums of seniors who rely on these programs," said Edward Coyle, Executive Director of the Alliance for Retired Americans.    www.retiredamericans.org