| Statement of The Honorable Jason Altmire, a Representative in Congress from the State of Pennsylvania Testimony Before the Subcommittee on Health
of the House Committee on Ways and Means May 03, 2007
Thank you, Mr. Chairman, Ranking Member Camp,
and members of the committee, including my colleague from Pennsylvania, Mr.
English, for providing me with the opportunity to testify today about my bill,
the Relief and Elimination of the Medicare Enrollment Deadline Penalty (or
REMEDY) Act, H.R. 1310.
As part of the Medicare
Modernization Act of 2003 (MMA), Congress included provisions to apply a late
enrollment penalty to the monthly premiums of Medicare beneficiaries who failed
to select a prescription drug plan by the end of the initial enrollment period
on May 15, 2006. The rationale for a late enrollment penalty was based in part
on experience with the Medicare Part B program and to prevent adverse
selection.
The late enrollment penalty – 1% of
the base beneficiary premium – is added for each uncovered month that a
beneficiary was eligible for coverage and did not enroll. For Medicare
beneficiaries who were on the rolls prior to January 1, 2006, the clock began after
the initial enrollment period ended on May 15, 2006. Their next opportunity to
enroll was during the annual open enrollment period, which ran from November
15, 2006 through December 31, 2006. Individuals who deferred enrollment during
the initial signup period and decided to wait until open enrollment would have
a total of seven uncovered months and would be penalized an additional 7%
starting with their 2007 monthly premium. The average monthly penalty in this
case is $1.91 and the percentage penalty applies for as long as the beneficiary
is enrolled in a Part D plan.
MMA does include exceptions. Individuals
who are able to maintain creditable coverage through a current or former
employer, or union for example, are exempt. Other
examples include TRICARE, the Federal Employees Health Benefits Plans,
and coverage through the Veteran’s Affairs Administration. In Pennsylvania, seniors are able to maintain creditable
coverage through the PACE, PACENET, and PACE Plus Medicare programs.
In addition, exceptions are made
for low-income individuals. Certain categories of
low-income populations, including Dual Eligibles (those eligible for Medicare
and Medicaid), enrollees in the Medicare Savings programs, and Supplemental
Security Income recipients, were automatically enrolled in plans, and therefore
face no penalty. The MMA also extends low-income subsidies to individuals
with incomes below 150% of poverty and with assets
below $10,000 for an individual and $20,000 for a couple, but these
beneficiaries may be subject to the late enrollment penalty.
Outside of these exceptions,
Medicare beneficiaries are subject to a late enrollment penalty for all
uncovered months. It is permanently added to their monthly premiums and the
amount is expected to increase each year as it is recalculated annually to be
the greater of: (1) the amount CMS determines is actuarially sound or (2) 1% of
the base beneficiary premium.
In the months leading up to the
initiation of the Medicare Part D program, beneficiaries were inundated with
information about coverage options, which often caused confusion and
frustration among seniors. In the Pittsburgh area, seniors had the option of
selecting one from over 60 available plans. It was simply too much information
to consume within too short of a time frame.
On top of the new plan options, the
initiation of the program on January 1, 2006 led to a number of access issues
for beneficiaries. Thousands of seniors were forced to wait days, in some cases
weeks, to obtain vital prescriptions. It was clear to all outside observers
that the Medicare Part D program was not ready for prime time.
Considering the hasty initiation of
the program, I introduced the REMEDY Act, H.R. 1310, to provide Medicare
beneficiaries with sufficient time in which to evaluate the myriad of coverage
options available to them. Choosing a health care plan is one of the most
important decisions one can make. It is only fair to provide beneficiaries with
the time necessary to properly choose an appropriate plan. The REMEDY Act
provides much needed relief to millions of Medicare beneficiaries, particularly
those with limited incomes.
H.R. 1310 does the following:
§
It delays implementation of the late enrollment penalty for the first
two years, 2006 and 2007, of the program.
§
It directs the Secretary of Health and Human Services to devise a
system in which to distribute rebates to any Medicare beneficiaries who may
have paid a late enrollment penalty.
§
It permanently eliminates the late enrollment penalty for low-income
subsidy beneficiaries, who may otherwise find it difficult to pay for the
increase in their monthly premium. I note and applaud the announcement of
Centers for Medicare and Medicaid Services (CMS) in January to delay the late
enrollment penalty for low-income enrollees for one year. My bill will codify
this waiver and make it permanent.
As of June 11, 2006, approximately
4.4 million Medicare beneficiaries did not have prescription drug coverage and
thus may be subject to a late enrollment penalty. CMS has not released data about
the specific number of Medicare beneficiaries who have started to pay the
penalty in 2007. But in my district, the Pennsylvania Department of Aging
estimates that 14,000 individuals are eligible for coverage, but are not
enrolled.
I urge the committee to delay the
late enrollment penalty for two years and provide seniors with the time
necessary to evaluate their health care options without being penalized. It is
a straightforward approach that maintains the current design of the program and
protects against adverse selection, while providing relief for millions of
seniors.
Thank you again, Mr. Chairman, for
the opportunity to testify today in support of my bill.
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