[Federal Register Volume 61, Number 214 (Monday, November 4, 1996)]
[Notices]
[Pages 56691-56693]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-28141]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES
[OACT-053-N]
RIN 0938-AH45


Medicare Program; Part A Premium for 1997 for the Uninsured Aged 
and for Certain Disabled Individuals Who Have Exhausted Other 
Entitlement

AGENCY: Health Care Financing Administration (HCFA), HHS.

ACTION: Notice.

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SUMMARY: This notice announces the hospital insurance premium for 
calendar year 1997 under Medicare's hospital insurance program (Part A) 
for the uninsured aged and for certain disabled individuals who have 
exhausted other entitlement. The monthly Medicare Part A premium for 
the 12 months beginning January 1, 1997 for these individuals is $311. 
The reduced premium for certain other individuals as described in this 
notice is $187. Section 1818(d) of the Social Security Act specifies 
the method to be used to determine these amounts.

EFFECTIVE DATE: This notice is effective on January 1, 1997.

FOR FURTHER INFORMATION CONTACT:
John Wandishin, (410) 786-6389.

SUPPLEMENTARY INFORMATION:

I. Background

    Section 1818 of the Social Security Act (the Act) provides for 
voluntary enrollment in the Medicare hospital insurance program 
(Medicare Part A), subject to payment of a monthly premium, of certain 
persons who are age 65 and older, uninsured for social security or 
railroad retirement benefits and do not otherwise meet the requirements 
for entitlement to Medicare Part A. (Persons insured under the Social 
Security or Railroad

[[Page 56692]]

Retirement Acts need not pay premiums for hospital insurance.)
    Section 1818(d) of the Act requires us to estimate, on an average 
per capita basis, the amount to be paid from the Federal Hospital 
Insurance Trust Fund for services performed and for related 
administrative costs incurred in the following year with respect to 
individuals age 65 and over who will be entitled to benefits under 
Medicare Part A. We must then, during September of each year, determine 
the monthly actuarial rate (the per capita month estimated above 
divided by 12) and publish the dollar amount to be applicable for the 
monthly premium in the succeeding year. If the premium is not a 
multiple of $1, the premium is rounded to the nearest multiple of $1 
(or, if it is a multiple of 50 cents but not of $1, it is rounded to 
the next highest $1). The 1996 premium under this method was $289 and 
was effective January 1, 1996. (See 60 FR 53631, October 16, 1995.)
    Section 1818(d)(2) of the Act requires us to determine and publish, 
during September of each calendar year, the amount of the monthly 
premium for the following calendar year for persons who voluntarily 
enroll in Medicare Part A.
    Section 1818A of the Act provides for voluntary enrollment in 
Medicare Part A, subject to payment of a monthly premium, of certain 
disabled individuals who have exhausted other entitlement. These 
individuals are those not now entitled but who have been entitled under 
section 226(b) of the Act, continue to have the disabling impairment 
upon which their entitlement was based, and whose entitlement ended 
solely because they had earnings that exceeded the substantial gainful 
activity amount (as defined in section 223(d)(4) of the Act).
    Section 1818A(d)(2) of the Act specifies that the premium 
determined under section 1818(d)(2) of the Act for the aged will also 
apply to certain disabled individuals as described above.
    Section 13508 of the Omnibus Budget Reconciliation Act of 1993 
(Public Law 103-66, enacted on August 10, 1993) amended section 1818(d) 
of the Act to provide for a reduction in the monthly premium amount for 
certain voluntary enrollees. The reduction applies for individuals who 
are not eligible for social security or railroad retirement benefits 
but who:
     Had at least 30 quarters of coverage under title II of the 
Act;
     Were married and had been married for the previous 1-year 
period to an individual who had at least 30 quarters of coverage;
     Had been married to an individual for at least 1 year at 
the time of the individual's death and the individual had at least 30 
quarters of coverage; or
     Are divorced from an individual who at the time of divorce 
had at least 30 quarters of coverage and the marriage lasted at least 
10 years.
    For calendar year 1997, section 1818(d)(4)(A) of the Act, specifies 
that the monthly premium that these individuals will pay for calendar 
year 1997 will be equal to the monthly premium for aged voluntary 
enrollees reduced by 40 percent.

II. Premium Amount for 1997

    Under the authority of sections 1818(d)(2) and 1818A(d)(2) of the 
Act, the Secretary has determined that the monthly Medicare Part A 
hospital insurance premium for the uninsured aged and for certain 
disabled individuals who have exhausted other entitlement for the 12 
months beginning January 1, 1997, is $311.
    The monthly premium for those individuals entitled to a 40 percent 
reduction in the monthly premium for the 12-month period beginning 
January 1, 1997 is $187.

III. Statement of actuarial Assumptions and Bases Employed in 
Determining the Monthly Premium Rate

    As discussed in section I of this notice, the monthly Medicare Part 
A premium for 1997 is equal to the estimated monthly actuarial rate for 
1997 rounded to the nearest multiple of $1. The monthly actuarial rate 
is defined to be one-twelfth of the average per capita amount that the 
Secretary estimates will be paid from the Federal Hospital Insurance 
Trust Fund for services performed and related administrative costs 
incurred in 1997 for individuals age 65 and over who will be entitled 
to benefits under the hospital insurance program. Thus, the number of 
individuals age 65 and over who will be entitled to hospital insurance 
benefits and the costs incurred on behalf of these beneficiaries must 
be projected to determine the premium rate.
    The principal steps involved in projecting the future costs of the 
hospital insurance program are (a) establishing the present cost of 
services furnished to beneficiaries, by type of service, to serve as a 
projection base; (b) projecting increases in payment amounts for each 
of the various service types; and (c) projecting increases in 
administrative costs. Establishing historical Medicare Part A 
enrollment and projecting future enrollment, by type of beneficiary, is 
part of this process.
    We have completed all of the above steps, basing our projections 
for 1997 on (a) current historical data and (b) projection assumptions 
under current law from the Midsession Review of the President's Fiscal 
Year 1997 Budget. It is estimated that in calendar year 1997, 32.809 
million people age 65 and over will be entitled to Medicare Part A 
benefits (without premium payment), and that these individuals will, in 
1997, incur $122.621 billion of benefits for services performed and 
related administrative costs. Thus, the estimated monthly average per 
capita amount is $311.45 and the monthly premium is $311. The monthly 
premium for those individuals eligible to pay this premium reduced by 
40 percent is $187.

IV. Costs to Beneficiaries

    The 1997 Medicare Part A premium is about 8 percent higher than the 
$289 monthly premium amount for the 12-month period beginning January 
1, 1996.
    We estimate that there will be, in calendar year 1997, 
approximately 324,000 enrollees who will voluntarily enroll in Medicare 
Part A by paying the full premium and who do not otherwise meet the 
requirements for entitlement. An additional 9,000 enrollees will be 
paying the reduced premium. The estimated overall effect of the changes 
in the premium will be a cost to these voluntary enrollees of about $90 
million.

V. Waiver of Notice of Proposed Rulemaking

    The Medicare statute, as discussed previously, requires publication 
of the Medicare Part A hospital insurance premium for the upcoming 
calendar year during September of each year. The amounts are determined 
according to the statute. As has been our custom, we use general 
notices, rather than formal notice and comment rulemaking procedures, 
to make such announcements. In doing so, we acknowledge that, under the 
Administrative Procedure Act, interpretive rules, general statements of 
policy, and rules of agency organization, procedure, or practice are 
excepted from the requirements of notice and comment rulemaking.
    We considered publishing a proposed notice to provide a period for 
public comment. However, we may waive that procedure if we find good 
cause that prior notice and comment are impracticable, unnecessary, or 
contrary to the public interest. We find that the procedure for notice 
and comment is unnecessary because the formula used

[[Page 56693]]

to calculate the Part A hospital insurance premium is statutorily 
directed, and we can exercise no discretion in following that formula. 
Moreover, the statute established the time period for which the premium 
will apply and delaying publication of the premium amount would be 
contrary to the public interest. Therefore, we find good cause to waive 
publication of a proposed notice and solicitation of public comments.

VI. Impact Statement

    This notice merely announces amounts required by legislation. This 
notice is not a proposed rule or a final rule issued after a proposal, 
and it does not alter any regulation or policy. Therefore, we have 
determined and certify, that no analyses are required under Executive 
Order 12866, the Regulatory Flexibility Act (5 U.S.C. 601 through 612), 
or section 1102(b) of the Act.
    In accordance with the provisions of Executive Order 12866, this 
notice was reviewed by the Office of Management and Budget.

    Authority: Sections 1818(d)(2) and 1818A(d)(2) of the Social 
Security Act (42 U.S.C. 1395i-2(d)(2) and 1395i-2a(d)(2)).

(Catalog of Federal Domestic Assistance Program No. 93.773, 
Medicare--Hospital Insurance)

    Dated: September 10, 1996.
Bruce C. Vladeck,
Administrator, Health Care Financing Administration.

    Dated: September 27, 1996.
Donna E. Shalala,
Secretary.
[FR Doc. 96-28141 Filed 11-1-96; 8:45 am]
BILLING CODE 4120-01-M