State budgets could take a big hit from rising Medicare premiums

Unless they get some federal relief, state Medicaid agencies will need to come up with millions of dollars to cover a significant increase in Medicare premiums, according to Crain's Chicago Business.

While annual Medicare Part B premium increases are not new, state governments are now realizing the impact of the rate hike of about 52 percent set to occur next year. For instance, California will face $550 million in new costs and has sent a letter to Congress seeking relief, the publication reports.

"All of a sudden you have this shot out of the blue," Matt Salo, head of the National Association of Medicaid Directors, tells the publication Marketplace. "If you are California, it's 'Well, here's an additional $300 million you have to come up with.'"

Other states are in the same boat. The Idaho Department of Health and Welfare estimates it will face nearly $20 million in additional Part B premium and deductible costs, while Texas is projecting $80 million and Virginia more than $66 million in new cost, the Chicago Business article notes.

While the 70 percent of Medicare beneficiaries who pay their Part B premiums through deductions from the Social Security payments will be spared the sharp rate hike, people not protected from the premium increase include those newly enrolled in Medicare and individuals dually eligible for Medicaid. The additional cost for dually eligible beneficiaries, who do not pay the Part B premium themselves, will fall directly on the states as Medicaid offices will have to cover the premium hikes, Juliette Cubanski, associate director of the Program on Medicare Policy at the Kaiser Family Foundation, tells Chicago Business.

Bills have been introduced in both the House and Senate that would limit the states' share of the anticipated premium increase, but as FierceHealthPayer reported earlier this month, similar efforts to halt the rate hike have stalled.

To learn more:
- read the Chicago Business report
- read the Marketplace article

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