The Washington Post reports, Biden unveils plan averting Medicare funding crisis, challenging GOP:
The White House on Tuesday proposed raising taxes on Americans earning more than $400,000 and reducing what Medicare pays for prescription drugs in an attempt to ensure that the health-care program for seniors is funded for the next two decades, challenging Republicans over an imminent funding crisis.
As forecasters warn that a key Medicare trust fund will run into major financial problems within five years, the administration proposed three key changes — including the tax hike and new rules to reduce prescription drug costs — to bolster the program for at least 25 years.
Roughly 60 million seniors depend on Medicare for their health insurance. Because the program is spending money at a much faster clip than it brings in funding, it faces automatic federal cuts starting in 2028, raising the nightmare scenario of medical providers refusing care to senior citizens if Congress and the White House don’t address the looming shortfall first.
The administration is introducing the measures as part of the White House’s broader 2024 budget proposal, but it faces an unlikely path to passage through a Republican-controlled House of Representatives. The budget is set to be released Thursday.
President Biden’s introduction of a Medicare financing plan aims for a direct contrast with the GOP, which has weighed cuts to the program while also criticizing the administration for approving legislation last year aimed at reining in spending on prescription drugs. The White House’s plan amplifies the high political stakes of Medicare and Social Security — by far the two biggest federal programs — ahead of the 2024 presidential election. Details of the plan were first reported Tuesday morning by The Washington Post.
“The budget I am releasing this week will make the Medicare trust fund solvent beyond 2050 without cutting a penny in benefits. In fact, we can get better value, making sure Americans receive better care for the money they pay into Medicare,” the president wrote in a separate New York Times op-ed. “If the MAGA Republicans get their way, seniors will pay higher out-of-pocket costs on prescription drugs and insulin, the deficit will be bigger, and Medicare will be weaker.”
The White House’s proposal would raise the net investment income tax, created by the Affordable Care Act, from 3.8 percent to 5 percent for all Americans earning more than $400,000 per year, in line with Biden’s pledge not to raise taxes for anyone under that threshold. The tax applies to capital gains and investment income. The plan also would expand this tax by applying it to more kinds of income from pass-through firms — businesses in which the owners pay taxes on their personal income taxes. Currently, these kinds of business owners do not pay this tax.
Additionally, the plan calls for expanding new rules reducing Medicare prescription drug payments beyond the measures approved last year as part of the Inflation Reduction Act. The plan would give the administration authority to negotiate what price the federal government pays for more drugs than the limited number approved as part of Democrats’ legislative package last year, while also speeding up the process for negotiations. The prescription drug changes would bring in an additional $200 billion for the Medicare trust fund, the plan states. The proposal would also cap co-pays for some generic drugs, such as those used to treat hypertension and high cholesterol, to $2 per prescription per month.
“The Budget’s expansion of Medicare drug negotiations will not only save money for the federal government — it will also cut beneficiaries’ out-of-pocket costs by billions of dollars,” the plan states.
Republicans are sure to rule out all of the new proposed taxes in the administration’s plan -because they are the lickspittles lackeys of America’s wealthy plutocrat class- and some budget hawks are adamant that the White House should be pushing spending cuts as well. Biden’s plan is also likely to elicit further rebuke from the pharmaceutical industry [Big Pharma], which has alleged restrictions on federal spending discourage research and innovation in groundbreaking medicine.[Without any evidence to support this. The government funds substantial amounts of medical research.]
Also unclear is whether the White House will address in its budget the looming shortfall facing Social Security, the pension program for the elderly, which faces its own funding crisis starting in 2033. Biden promised in the State of the Union address that he would introduce a plan funding Medicare for two decades, but he made no similar pledge for Social Security. Sen. Bernie Sanders (I-Vt.) and some other Democrats have urged Biden to expand payroll taxes for high earners to fund the pension program, but the administration has thus far avoided that approach.
Conservatives have said raising the net investment income tax is a bad way to fund Medicare. Kyle Pomerleau, a senior fellow at the American Enterprise Institute, a conservative-leaning think tank, said a more efficient approach would be to raise what workers pay into the Medicare trust fund from dedicated payroll taxes, rather than rely on a tax base — investment income — that can jump up and down depending on the year.
Yes, let’s tax the working class more so that the investor class, i.e, the predator class, does not have to pay more in taxes. The wealthy plutocrats never want to pay their fair share.
Right now, workers pay 6.2 percent for Social Security and 1.45 percent for Medicare, and employers pay the same amounts.
“It can distort savings and investment decisions, which a payroll tax does not do,” Pomerleau said. “And capital gains can be a somewhat unreliable tax base.”
So wealthy plutocrats should not have to pay a penny more. What an asshole.
Estimates vary for when Medicare and Social Security will face funding crises. The most recent estimate from the Medicare trustees was that the program’s “Part A,” which reimburses hospital care, will be insolvent by 2028. The nonpartisan Congressional Budget Office more recently estimated that date would not be until 2030.
“The challenge here is that many, many people are getting old, and the cost of health care is going way up. Medicare is spending far more money than anybody ever anticipated [the U.S. health care system is the most expensive in the world – because everyone is ripping it off], and without action will be unable to pay benefits,” said Howard Gleckman, a senior fellow at the Urban Institute, a D.C.-based think tank. “It has been decades since a president came out with a policy plan that really confronted this issue.”
President Biden’s op-ed at the New York Times, Joe Biden: My Plan to Extend Medicare for Another Generation:
Millions of Americans work their whole life, paying into Medicare with every working day — starting with their first job, even as teenagers. Medicare is more than a government program. It’s the rock-solid guarantee that Americans have counted on to be there for them when they retire.
For decades, I’ve listened to my Republican friends claim that the only way to be serious about preserving Medicare is to cut benefits, including by making it a voucher program worth less and less every year. Some have threatened our economy unless I agree to benefit cuts.
Only in Washington can people claim that they are saving something by destroying it.
The budget I am releasing this week will make the Medicare trust fund solvent beyond 2050 without cutting a penny in benefits. In fact, we can get better value, making sure Americans receive better care for the money they pay into Medicare.
The two biggest health reform bills since the creation of Medicare, both of which will save Medicare hundreds of billions over the decades to come, were signed by President Barack Obama and me.
The Affordable Care Act embraced smart reforms to make our health care system more efficient while improving Medicare coverage for seniors. The Inflation Reduction Act ended the absurd ban on Medicare negotiating lower drug prices, required drug companies to pay rebates to Medicare if they increase prices faster than inflation and capped seniors’ total prescription drug costs — saving seniors up to thousands of dollars a year. These negotiations, combined with the law’s rebates for excessive price hikes, will reduce the deficit by $159 billion.
We have seen a significant slowdown in the growth of health care spending since the Affordable Care Act was passed. In the decade after the A.C.A., Medicare actually spent about $1 trillion less than the nonpartisan Congressional Budget Office projected before the A.C.A. reforms were in place. In 2009, before the A.C.A., the Medicare trustees projected that Medicare’s trust fund would be exhausted in 2017; their latest projection is 2028. But we should do better than that and extend Medicare’s solvency beyond 2050.
So first, let’s expand on that progress. My budget will build on drug price reforms by strengthening Medicare’s newly established negotiation power, allowing Medicare to negotiate prices for more drugs and bringing drugs into negotiation sooner after they launch. That’s another $200 billion in deficit reduction. We will then take those savings and put them directly into the Medicare trust fund. Lowering drug prices while extending Medicare’s solvency sure makes a lot more sense than cutting benefits.
Second, let’s ask the wealthiest to pay just a little bit more of their fair share, to strengthen Medicare for everyone over the long term. My budget proposes to increase the Medicare tax rate on earned and unearned income above $400,000 to 5 percent from 3.8 percent. As I proposed in the past, my budget will also ensure that the tax that supports Medicare can’t be avoided altogether. This modest increase in Medicare contributions from those with the highest incomes will help keep the Medicare program strong for decades to come. My budget will make sure the money goes directly into the Medicare trust fund, protecting taxpayers’ investment and the future of the program.
When Medicare was passed, the wealthiest 1 percent of Americans didn’t have more than five times the wealth of the bottom 50 percent combined, and it only makes sense that some adjustments be made to reflect that reality today.
Let’s ask them to pay their fair share so that the millions of workers who helped them build that wealth can retire with dignity and the Medicare they paid into. Republican plans that protect billionaires from a penny more in taxes — but won’t protect a retired firefighter’s hard-earned Medicare benefits — are just detached from the reality that hardworking families live with every day.
Add all that up, and my budget will extend the Medicare trust fund for more than another generation, an additional 25 years or more of solvency — beyond 2050. These are common-sense changes that I’m confident an overwhelming majority of Americans support.
MAGA Republicans have a different view. They want to repeal the Inflation Reduction Act [the new “repeal Obamacare”]. That means they want to take away the power we just gave to Medicare to negotiate for lower prescription drug prices. Get rid of the $35 per month cap for insulin we just got for people on Medicare. And remove the current $2,000 total annual cap for seniors.
If the MAGA Republicans get their way, seniors will pay higher out-of-pocket costs on prescription drugs and insulin, the deficit will be bigger, and Medicare will be weaker. The only winner under their plan will be Big Pharma. That’s not how we extend Medicare’s life for another generation or grow the economy.
This week, I’ll show Americans my full budget vision to invest in America, lower costs, grow the economy and not raise taxes on anyone making under $400,000. I urge my Republican friends in Congress to do the same — and show the American people what they value.
What do you think?