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Obama Medicare plan: No voucher but maybe a bill
First Published Sep 24 2012 12:17 pm • Last Updated Sep 24 2012 12:22 pm

Washington • He’ll never turn Medicare into a voucher, but if you are lucky enough to be financially comfortable in retirement, odds are you’ll pay higher premiums under President Barack Obama’s plan. It’s not just the 1 percent who’ll feel the pinch.

And take note, baby boomers: The Medicare you get won’t be quite as generous as what your parents’ generation enjoys. A higher deductible here, a new co-payment there, and the tweaks add up.

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With the future of Medicare on the line in the presidential election, The Associated Press asked the Obama campaign five questions about how his plans for seniors’ health care would affect critical issues of costs and benefits. (The AP also sent Republican Mitt Romney a set of questions, and the responses are the subject of a companion report.)

Unlike Romney, Obama is not calling for a major Medicare remake. Most of the president’s cost-cutting ideas are incorporated in his health care law, and will phase in unless Romney wins and makes good on his pledge to repeal it. Other Obama proposals are drawn from government advisory groups or bipartisan commissions seeking consensus on how to reduce deficits.

It doesn’t mean they’re pain-free. AARP gave a thumbs-down to this year’s Obama budget, citing Medicare cost shifts.

If Obama is re-elected and plunges into deficit negotiations with congressional Republicans, he will be pushed for greater Medicare savings, by cutting payments to service providers or squeezing more from recipients.

"Neither one of (the candidates) is going to basically lay his cards on the table before the election," said former AARP CEO Bill Novelli, now at Georgetown University in Washington. "Obama is going to have to raise the price of benefits, whether by hundreds or thousands, I don’t know. Where else is the money going to come from, besides printing it?"

Some Medicare questions for consumers to watch, along with answers from the Obama campaign and the views of several experts:

Q: What new costs can seniors expect under Obama’s plan for Medicare?

A: You may need a CPA degree to understand the complicated details of changes proposed by the president.


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Broadly speaking, Obama would raise monthly premiums for retirees making $85,000 or more ($170,000 for married couples). He also would hit newly joining baby boomers with a series of fees.

Currently only about 5 percent of beneficiaries pay higher, income-based monthly premiums for outpatient coverage under Medicare Part B and even fewer pay higher premiums for prescription drug coverage.

Under Obama’s proposal, a growing share of seniors would pay the higher premiums over time. He’d also bump up the premiums paid by higher-income beneficiaries by 15 percent.

After about 20 years, the top 25 percent of Medicare recipients would be paying higher, income-based premiums.

An analysis by the nonpartisan Kaiser Family Foundation estimates that in 2017, a single retiree with income of $86,000 would pay $447 more in premiums for Medicare’s outpatient and prescription drug coverage. A married couple with income of $175,000 would pay about $894 more in that year.

As for the fees on newly joining baby boomers, they’d face a $25 increase in their annual outpatient deductible (initially for a few years only), some limits on the use of ‘Medigap’ insurance to fill in gaps left by Medicare, and a new home health co-payment in certain cases.

Think of these proposals as the president’s opening bid in budget talks.

Q: Hasn’t Obama also hinted he might be willing to increase the eligibility age for Medicare?

A: In budget negotiations with Republicans last year, Obama indicated a willingness to consider gradually raising the eligibility age to 67, from 65 now. Romney supports the idea. But the president has since walked it back.

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