The White House has insisted that the “one big beautiful bill” does not touch Medicare benefits. And it’s true that no standard Medicare benefits are reduced or eliminated under the One Big Beautiful Bill Act (OBBBA).
But largely unnoticed is an OBBBA provision that suspends until 2034 an initiative intended to streamline enrollment in state-run Medicaid programs that help seniors who qualify get a hand paying for out-of-pocket Medicare costs.
That plan would have widened enrollment in Medicare Savings Programs (MSPs) by reducing the paperwork needed to sign up. Republicans opposed the plan, justifying their resistance as an effort to prevent waste and fraud. They are all about adding paperwork for verification, not making it easier to get benefits – even for people who clearly qualify. And there has never been any suggestion of widespread abuse of the MSP program.
More important, suspension of the streamlining rule will reduce federal Medicaid spending by $66 billion over 10 years because of lower enrollment, according to the Congressional Budget Office. In effect, the suspension funds the tax cuts going to upper income households – it effectively transfers $66 billion from the poor to the wealthy.
“What’s particularly insidious and cruel is that this was meant to benefit low income seniors to help them pay for their prescription drugs, the cost of their daily living, and increase the the the amount that they receive in their Social Security checks,” said Frederic Riccardi, president of the Medicare Rights Center.
MSPs cover the cost of premiums and other out-of-pocket expenses, and automatically enroll people in the federal Low Income Subsidy, which helps people pay for medicines under Medicare Part D. Only about 60 percent of eligible seniors are enrolled because they aren’t aware of them, and the plans have complex enrollment requirements.
We’re talking here about substantial financial help for people who are struggling.
The U.S. Census Bureau reported last month that the percentage of Americans aged 65 or older living in poverty rose in 2024 to 15 percent — up from 14.2 percent in 2023 and 10.7 percent in 2021 — the only age group that saw an increase in poverty.
Health care costs are a major culprit in that increase. Medicare Part B and D premiums and cost sharing account for nearly 25 percent of average monthly Social Security benefits, according to KFF — and that figure does not include other costs, such as dental care, long-term care or premiums for supplemental Medicare coverage, known as Medigap. Taking those costs into account, health care spending consumes 39 percent of Social Security benefits on average, KFF found.
Enrolling in an MSP and the Low Income Subsidy, which helps with prescription drug costs, can save an individual as much as $8,400 annually in Medicare premiums, deductibles, co-pays and other out-of-pocket costs, according to the Medicare Rights Center. Consider that one in four Medicare beneficiaries lives on less than $24,600 and you can see that this rule suspension is a huge blow.
The decision to suspend the streamlined enrollment plan comes at a time when Medicare costs are rising. The Part B premium is projected to rise 11.6 percent next year. That would consume most of the dollar amount of the Social Security cost-of-living adjustment received by low income seniors, which is projected to be around 2.7 percent.
Most experts also expect Part D prescription drug plan premiums to rise sharply next year. That’s because the administration scaled back a program aimed at holding down premium increases through subsidies paid to drug plan providers. (I’ll have more on those numbers later this fall when hard numbers become available, although right now it’s not clear how announcements about the COLA and premiums might be impacted by the federal government shutdown.)
Learn more about the MSP story in my latest column for The New York Times.