2:24am

Fri December 14, 2012
Shots - Health News

Making The Rich Pay More For Medicare

Originally published on Fri December 14, 2012 4:33 am

When it comes to reducing Medicare spending, asking wealthier seniors to pay more is one of the few areas where Democrats have shown a willingness to even consider the subject.

"I do believe there should be means testing. And those of us with higher income in retirement should pay more," said Sen. Dick Durbin, D-Ill., on last Sunday's Meet the Press. "That could be part of the solution."

Robert Moffit of the conservative Heritage Foundation says it will have to be part of the solution if Medicare is to withstand the onslaught of 78 million baby boomers.

"If we [boomers] insist on what we are entitled to under the current law, we are going to guarantee the shrinkage of economic opportunities for our kids and our grandchildren," he said. "I think it's a very, very bad future for this country if we do not get federal entitlements under control."

Besides, making the rich pay more would hardly be breaking new ground. Medicare already charges wealthy people more and poor people less.

"We already don't have a common standard social insurance system where everybody gets the same benefits," Moffit says. "We already have means testing."

Indeed, as part of a 2003 Medicare law, Congress imposed higher outpatient premiums for the program's optional Part B on wealthier beneficiaries. And then in 2010, as part of the Affordable Care Act, Congress asked wealthier beneficiaries to pay more for their prescription drug coverage, too.

Meanwhile, at the other end of the income scale, says Moffit, low-income Medicare beneficiaries get special breaks. The very poorest get coverage through Medicaid.

And even those with moderate incomes are spared having to pay increases in their outpatient premiums in years when there's no or only a small increase in Social Security.

"When premiums go up, if premium increases exceed their cost-of-living adjustment for Social Security they're held harmless," he said. "They don't pay the higher premiums."

So Moffit thinks there's plenty of precedent, and plenty of room, to increase the amount, or lower the income threshold for better-off beneficiaries.

"Given the size of the debt, it's probably a good idea for Congress to simply say to the rest of taxpayers, 'Look, we're not going to require you to continue to subsidize the wealthiest retirees. That's probably not the best policy,' " he said. "Those people who can afford to pay more for their health care should do it."

But that sentiment is far from universal. For one thing, wealthy means something far different when it comes to Medicare than it does when it comes to income taxes.

"Higher income is defined as people with incomes of $85,000 or more, and obviously in the tax world we're talking about people with $250,000 in income or higher," said Patricia Neuman of the nonpartisan Kaiser Family Foundation.

Then there's the idea that Medicare premiums are the only thing most seniors pay when it comes to health care. Rep. Allyson Schwartz, D-Pa., who has worked on Medicare issues, says that's hardly the case.

"They get Medigap; they get supplemental insurance. There are copays," she said, referring to the idea that seniors tend to have both lower incomes, and higher health care costs, than most other Americans.

She added: "We want to make sure that we don't do anything that reverses that universality or the benefits and hurt beneficiaries."

There's still one more complication: The Affordable Care Act imposed one other new Medicare tax on the wealthy that's just about to take effect. Starting in January, people with incomes over $200,000 will have to pay the Medicare payroll tax on income from interest, dividends and other nonwage activities. That's one more place budget negotiators won't be able to go to mine more money from Medicare.

Copyright 2013 NPR. To see more, visit http://www.npr.org/.

Transcript

RENEE MONTAGNE, HOST:

The Medicare program is another place budget negotiators are looking to lower costs. There's not much agreement on how to cut Medicare except when it comes to the idea of raising premiums for affluent seniors. Thing is, that may not produce the results some hope for. Here's NPR's Julie Rovner.

JULIE ROVNER, BYLINE: When it comes to reducing Medicare spending, asking wealthier seniors to pay more is one of the few areas where Democrats have shown a willingness to even consider the subject. Here's Illinois Senator Dick Durbin on last week's "Meet the Press."

SENATOR DICK DURBIN: I do believe there should be means testing. And those of us with higher income in retirement should pay more. That could be part of the solution.

ROVNER: Robert Moffit of the conservative Heritage Foundation says it will have to be part of the solution if Medicare is to withstand the onslaught of 78 million baby boomers.

ROBERT MOFFIT: I think it's a very, very bad future for this country if we do not get federal entitlements under control.

ROVNER: And besides, says Moffit, making the rich pay more would hardly be breaking new ground. Medicare already charges wealthy people more and poor people less.

MOFFIT: We already don't have a common standard social insurance system where everybody gets the same benefits. We already have means testing.

ROVNER: Indeed, as part of a 2003 Medicare law, Congress imposed higher outpatient premiums on wealthier beneficiaries. And then in 2010, as part of the Affordable Care Act, Congress asked wealthier beneficiaries to pay more for their prescription drug coverage too. Meanwhile, at the other end of the income scale, says Moffit, low-income Medicare beneficiaries get special breaks. The very poorest get coverage through Medicaid. Even those with moderate incomes are spared having to pay increases in their outpatient premiums in years when there's no or only a small increase in Social Security.

MOFFIT: When premiums go up, if premium increases exceed their cost-of-living adjustment for Social Security, they're held harmless and they don't pay the higher premiums.

ROVNER: So Moffit thinks there's plenty of precedent, and plenty of room to increase the amount, or lower the income threshold for better-off beneficiaries.

MOFFIT: Given the size of the debt, it's probably a good idea for Congress to simply say to the rest of taxpayers, look, we're not going to require you to continue to subsidize the wealthiest retirees. That's probably not the best policy. Those people who can afford to pay for - more for their health care should do it.

ROVNER: But that sentiment is far from universal. For one thing, says Patricia Neuman of the nonpartisan Kaiser Family Foundation, wealthy means something far different when it comes to Medicare than it does when it comes to income taxes.

PATRICIA NEUMAN: Because higher income is defined as people with incomes of $85,000 or more, and obviously in the tax world people are talking about people with $250,000 in income or higher.

ROVNER: Then there's the idea that Medicare premiums are the only thing most seniors pay when it comes to health care. Allyson Schwartz is a democratic congresswoman from Pennsylvania who's worked on Medicare issues. She says that's hardly the case.

REPRESENTATIVE ALLYSON SCHWARTZ: They get Medigap, they get supplemental insurance. There are co-pays.

ROVNER: In other words, seniors tend to have both lower incomes and higher health care costs than most other Americans.

SCHWARTZ: We want to make sure that we don't do anything that reverses that universality or the benefits and hurt beneficiaries. So the conversation, which you likely have to have, has to start with our commitment to Medicare.

ROVNER: And there's one other complication: The Affordable Care Act imposed one other new Medicare tax on the wealthy that's just about to take effect. Starting in January, people with incomes over $200,000 will have to pay the Medicare payroll tax on income from interest, dividends and other nonwage activities. That's one more place budget negotiators won't be able to go to mine more money from Medicare. Julie Rovner, NPR News, Washington. Transcript provided by NPR, Copyright NPR.