Means testing Medicare

Democrats warm to Medicare change that late Sen. Edward Kennedy opposed

By Elise Viebeck
The Hill, December 8, 2012

Democrats in Congress are changing their tune on means testing in Medicare, an idea the late Sen. Edward Kennedy (D-Mass.) resisted for decades.

Leading Democratic lawmakers have suggested that raising premiums for wealthy Medicare beneficiaries could be a matter of common ground with Republicans in the ongoing deficit-reduction talks.

"I think that is reasonable and certainly consistent with the Democratic message that those who are better off in our country should be willing to pay a little more," Senate Majority Whip Dick Durbin (D-Ill.) said Thursday.

The idea of affluence testing is not new — wealthy Medicare recipients already pay higher premiums for doctor visits and prescription drug coverage.

But negotiations to avoid the so-called "fiscal cliff" open the door to new measures that would make Medicare costs more progressive based on income.

Last week, Senate Finance Committee Chairman Max Baucus (D-Mont.) called the idea "somewhat attractive" as a bargaining chip for talks on the so-called fiscal cliff.

Sen. Claire McCaskill (D-Mo.) remarked that "Donald Trump may need medication, but he certainly doesn’t need the government to pay for it."

And Congressional Black Caucus Chairman Emanuel Cleaver (D-Mo.) called means testing a good way to bolster Medicare's budget without cutting benefits.

"We already have a substantial amount of means-testing in the Medicare program — most significantly, there is no cap on the income subject to the Medicare tax," said (Rep. Henry) Waxman in a statement to The Hill.

"That is the right way to ask the better-off to pay more. And in fact, we also have means testing now of the Part B and Part D premiums. It is a mistake to go further."


By Don McCanne, MD

Now that health care costs are unbearably high, Medicare must be progressively financed since moderate- and low-income individuals can no longer bear the full costs. A major step forward was the removal of the cap on wages subject to Medicare taxes, so higher income individuals pay more. The Affordable Care Act also added a new 0.9% Medicare tax for incomes over $200,000/$250,000.

In addition, in order to help cover Medicaid expansion and subsidies for the exchange plans, the Affordable Care Act also added a 3.8% tax on investment income, again for those with incomes over $200,000/$250,000. So we have already embarked on policies that make health care financing progressive, though we need to do more, but only on the financing end.

Medicare benefits should be the same for everyone. We should eliminate premiums and cost sharing, and we should expand benefits so that administratively wasteful Medigap and retiree health benefit programs are no longer necessary. Low income individuals should receive the same standard of care as the wealthy, just as was the intent in enacting the traditional Medicare program.

Introducing means testing, which we have already begun with Part B and Part D premiums, reduces support of wealthier beneficiaries who are annoyed by these additional charges. Once the principle of means testing is established, the budget hawks ratchet it up, driving wealthier individuals to look for private options, currently available as the Medicare Advantage plans. It is only one small additional step to introduce premium support - vouchers - where the wealthy will take their money and run. Once you lose support of wealthier individuals who have a strong political voice, then Medicare will descend down the path toward becoming a welfare program, like Medicaid.

We cannot allow this bipartisan attack on Medicare to proceed. Mobilize the forces!