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Social Security Administration

Stop Medicare Variable SMI provision, Save $1.47 BILLION a year

Currently there are 36.428 million people receiving SSA benefits and approximately the same amount of people receiving Medicare part B benefits over age 65.


My idea is to eliminate Section 1839(f) of the Social Security Act which allows for Variable SMI.


Doing this would save the government (a low-end estimate) $1.470 BILLION dollars a year.


(Not counting the disability beneficiaries that have part B Medicare)


How did I come up with this figure?


Given that some people have their Medicare part B paid for by the state. (Medicaid) We will use a low estimate of 25 million people that over age 65 that pay for their own premiums (and are subject to Variable SMI provisions).


In 2010 Medicare part B premiums costs $110.50 per month. In 2011, they cost $115.40, an increase of $4.90. The currently Variable SMI provision doesn’t allow for Medicare to charge for this increase, thus the government loses an additional $58.80 a year per person. Mulitple that by 25 million people and the government loses $1.47 BILLION dollars a year by having this provision.


(Note: this is using low-end estimates and not counting disability beneficiaries but this just shows the scope of what we are dealing with in terms of substantial savings.)


If the government had eliminated Variable SMI beginning in 2010, the United States would have already saved at least $5.7 BILLION dollars. (premiums went from $96.40 to $115.40)


Medicare and Social Security benefits are and should be separate. The Variable Smi provision combined two separate programs and with the adaptation of Section 1839(f) of the Social Security Act. This is costing the US too much money. As a government employee I don’t have the advantage of telling my insurance company I don’t want them to increase my premiums JUST because I didn’t receive a Cost-of-Living increase myself. Why should Medicare recipients? If anything, eliminating Variable SMI to all new Medicare recipients would save the government millions.



Idea No. 370