The Trump Administration has rightly celebrated the news that private-sector administered Medicare Advantage plans will actually have lower premiums next year, declining six percent in 2019 compared to 2018. As Health and Human Services Secretary Alex Azar observes, “Medicare Part D and Medicare Advantage demonstrate the successes possible when we harness consumer choice and private-sector innovation to improve care and lower cost.”
This is great news for the estimated 22.6 million older Americans who have chosen Medicare Advantage over traditional Medicare — an all-time high.Seniors are increasingly opting for Medicare Advantage because of the range of additional services they receive and the protection it affords against higher medical expenses.
Medicare Advantage has also proven successful in bringing down overall health care costs by utilizing start-of-the-art disease management programs. Recent rules by the Trump Administration will further enhance the flexibility of Medicare Advantage plans to tailor their benefits to the individual needs of beneficiaries. It’s a common sense and important way to keep costs in check by recognizing the fact that a senior with diabetes has different health care needs than a senior with heart disease.
But free market principles are not the only factors driving down the cost of Medicare Advantage. Congress voted this year to suspend the Health Insurance Tax (HIT) for 2019, further reducing Medicare Advantage rates. The HIT is a perverse remnant of Obamacare that targets seniors and middle-class Americans for shouldering the largest burden of this tax.
The HIT is particularly painful for retirees who already struggle with the costs of health care. Asking them to underwrite the cost of health insurance and care for younger, working-age people is wrong.
Thankfully, Congress did the right thing in suspending the HIT for 2019 and in doing so, it reduced costs by more than $500 per year for the average couple with Medicare Advantage. It’s real money that seniors can use for other household bills or saving for a rainy day.
That’s the good news. The bad news is that the HIT is scheduled to come back in 2020 unless Congress takes action. After the one-time suspension of the HIT expires, seniors will be forced once again to pay higher Medicare Advantage premiums. It’s a bad deal for all Americans, but the more than 20 million seniors who depend on Medicare Advantage will feel the most pain. Older Americans can ill afford the $500 per couple rate increase that is lurking around the corner.
The solution is straightforward. In a perfect world, the HIT would be abolished once and for all. At a minimum, Congress could continue the suspension of the HIT into 2020. Either action would provide seniors with greater financial security. The Trump Administration is doing a good job keeping the Medicare Advantage program innovative and reasonably priced for seniors, but the administration cannot unilaterally eliminate this Obamacare tax. It is up to Congress and they need to do their part by suspending the HIT for 2020.