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Cost of Protecting Medicare Beneficiaries from Identity Theft Far Less Than Originally Thought

May 14, 2013

A new estimate released by the Centers for Medicare and Medicaid Services (CMS) reveals that, of the options available to protect Medicare beneficiaries from identity theft, the least expensive of all would be a partial removal of the Social Security Number (SSN) from the Medicare card.  According to the estimate, the cost of obscuring the first five digits of the SSN is $255 million.  Alternatively, the cost of replacing the SSN with a new beneficiary number was estimated to cost $317 million.  The estimate is a 62 percent reduction from CMS’s prior estimate of $850 million.

The new CMS estimate was requested during an August 2012 hearing in which the Government Accountability Office (GAO) criticized the methods used by CMS in prior estimates regarding the removal of the SSN from Medicare cards.  CMS was asked to recalculate its numbers based on GAO’s cost estimating guidelines.

Responding to the updated estimates, Social Security Subcommittee Chairman Sam Johnson (R-TX) stated, “Despite the long known dangers of identity theft, CMS refuses to remove Social Security Numbers from Medicare cards.  Ten months ago the Subcommittees on Social Security and Health rejected CMS’ phony $850 million price tag for removing SSNs.  By holding their feet to the fire, CMS now tells us that the real cost to remove SSNs is actually 62 percent less than what they initially stated.  It’s time for CMS to act.  If they won’t do what’s right for America’s seniors, we will. That’s why I, along with my fellow Texan and Subcommittee on Social Security member, Congressman Lloyd Doggett, have re-introduced legislation, H.R. 781, the Medicare Identity Theft Prevention Act of 2013, to protect seniors and remove SSNs from Medicare cards once and for all.”

Health Subcommittee Chairman Kevin Brady (R-TX) added, “Protecting the personal information and identities of our nation’s seniors must be a top priority.  With the release of their latest report, it appears that CMS is finally taking seriously the need to remove Social Security Numbers from Medicare beneficiary cards.  While it took three iterations of this costs report, we are encouraged that all parties are now fully engaged and ready to tackle this serious issue.  I continue to look forward to the day that seniors can feel safer in receiving their benefits without the fear of losing their identities to thieves.”

In 2007, President George W. Bush’s Identity Theft Task Force found that the SSN is “the most valuable commodity for an identity thief,” and the Administration instructed all agencies to reduce the unnecessary use of SSNs.  In 2008, the Social Security Administration Inspector General recommended that SSNs be removed from Medicare cards.  The Department of Justice reported in 2010 that of the 8.6 million households victimized by ID theft, nearly 1 million were headed by a senior 65 or older.  Yet, nearly 50 million seniors must carry their Medicare cards with their SSNs to obtain health services.  

The U.S. House has twice passed legislation to remove the SSN with overwhelming bipartisan support.  Last year, the House passed, by voice vote, H.R. 1509, The Medicare Identity Theft Prevention Act of 2011, sponsored by Subcommittee on Social Security Chairman Sam Johnson and Congressman Lloyd Doggett.  The legislation requires the Department of Health and Human Services to begin removing the SSN from Medicare cards.  In 2008, the House passed similar legislation sponsored by both Johnson and Doggett.  However, the Senate has not considered either piece of legislation.  The two Congressmen have reintroduced similar legislation, H.R. 781, this session.