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Executive Summary

MEDICARE PART B PREMIUM INCREASES WILL BE EXAMINED AT A HEARING before Rep. Stark's (D-Calif.) House Ways & Means/Health Subcommittee, tentatively scheduled for Sept. 30. The hearing will focus on just-released HHS projections that Medicare Part B premiums will jump 39% in 1988, if the present statutory formula is followed. HHS Secretary Bowen is expected to testify; he will be asked to provide reasons for the increase and discuss whether the fee is "locked in" or open to adjustment before taking effect in January (premiums are set for the calendar year rather than the federal fiscal year). Stark has scheduled the hearing to coincide with the publication of the Part B increase in the Federal Register. According to projections by actuarial staff of the Health Care Financing Administration, Part B premiums will increase to $24.80 from the current $17.90 fee. A 39% increase would represent the largest premium hike in the history of the Medicaid program. Last year premiums were raised by only $2.40 to the 1987 level. The sharp increase in costs for existing programs could be a windfall for PMA in its effort to build opposition to the addition of drug benefits. The HCFA proposal makes the threat of higher premiums more tangible and an easier target. Health Subcommittee Ranking Minority Member Gradison (R-Ohio) has suggested that the Reagan Administration has exaggerated the increase projections so that further premium increases for additional benefits will seem unaffordable. Speaking on Sept. 18 at a Joint Government Relations Seminar sponsored by the American College of Nuclear Physicians and the Society of Nuclear Medicine, Gradison said HCFA's projected increase "may be overstated to discourage new benefits" that would be added to Medicare via catastrophic care legislation. Staffers in the Senate, where the House-passed catastrophic care bill is still pending, said HHS' announcement will "not really have a big effect" because Congress had been expecting an increase and had factored it into their cost considerations.

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