President’s 2013 Budget Proposes Shifting More Medicare Costs to Beneficiaries

Sacramento, CA —President Obama’s 2013 budget proposal includes a recommendation projected to save $2.5 billion over 10 years by imposing a surcharge on Medicare beneficiaries who buy “near first-dollar” Medicare supplement insurance often called Medigap. This surcharge would add an estimated average of $400 to the annual premiums for beneficiaries who buy one of these policies to cover out-of-pocket costs in Original Medicare. This is one of many proposals being considered in Congress to make beneficiaries pay more for their care as a way to reduce Medicare costs, but would do nothing to address the skyrocketing costs of health care services.

The President’s budget also shifts costs to beneficiaries in other ways, by expanding means testing, adding a copayment, and increasing the Part B deductible. Currently, beneficiaries with higher incomes already pay higher premiums for Medicare Parts B and D. The President’s proposal would increase the number of Medicare beneficiaries who must pay higher premiums from 5% to 25%. A new copayment would be added for home health care, which currently has no copayment. The annual Part B deductible would be increased for new beneficiaries beginning in 2017.

While California Health Advocates (CHA) supports containing Medicare’s costs, CHA opposes proposals to shift more costs to beneficiaries. “Many in Washington DC, as reflected in the President’s 2013 budget proposal, believe that Medicare beneficiaries don’t have enough ‘skin in the game,’ that if they had to pay more for their care, they would be more cautious about using services,” commented Elaine Wong Eakin, Executive Director of CHA. “This erroneous belief assumes that beneficiaries use services unnecessarily. It also ignores the fact that half of all Medicare beneficiaries have annual incomes of $22,000 or less,” Eakin pointed out. “Shifting costs to beneficiaries may appear to save Medicare money in the short term, but will most likely lead to higher cost in the long term as people delay care until they need major interventions or emergency care. Shifting costs also does not address the underlying causes of rising health care costs,” continued Eakin.

CHA opposes Medicare changes that result in higher out-of-pocket costs for an already vulnerable population, and supports policies that address and reduce the growing health care costs, such as eliminating Medicare fraud, waste and abuse, promoting quality of care and better health outcomes, and emphasizing wellness and prevention.

See our article, “Skinning” Medicare Beneficiaries, for more discussion, and view the Administration’s 2013 budget proposal.

California Health Advocates is an independent non-profit organization that provides quality Medicare and related health care coverage information, education and policy advocacy. CHA equips community organizations and government agencies with up-to-date information, especially the 24 local HICAPs, which provide benefits counseling and community education directly to those with Medicare and their families. For more information, visit its website at


Bonnie Burns
Training and Policy Specialist
(831) 438-6677

Karen Joy Fletcher

Our blogger Karen Joy Fletcher is CHA’s Communications Director. With a Masters in Public Health from UC Berkeley, she is the online “public face” of the organization, provides technical expertise, writing and research on Medicare and other health care issues. She is responsible for digital content creation, management of CHA’s editorial calendar, and managing all aspects of CHA’s social media presence. She loves being a “communicator” and enjoys networking and collaborating with the passionate people and agencies in the health advocacy field. See her current articles.