Medicare Catastrophic?

Seniors soon will face their biggest Medicare premium increase in a decade ? to $66.60 a month, starting next year ? while some congressional leaders are hatching plans to force affluent seniors to pay even bigger premiums in the future.


This is dangerous politics and backwards policy.


Health and Human Services Secretary Tommy Thompson announced in mid-October that Medicare premiums will rise next year to reflect higher health costs. By law, premiums that seniors pay must cover 25 percent of the costs of doctors? visits and other outpatient services financed through Medicare. Taxes pay the rest.


At the same time, congressional aides leaked to reporters the outline of a plan to force seniors with higher incomes — possibly $60,000 or $100,000 a year — to pay a bigger share of their Medicare premiums.


The plan comes from congressional negotiators wrestling through the details of the huge Medicare bills passed by Congress last summer.


They have an admirable goal ? to inject ?means testing? into Medicare. Done right, means testing would be a good thing.


The Medicare benefit would be ?tested? according to the ?means? of the beneficiaries. Lower income seniors would get more assistance ? by paying less, receiving more benefits, or both.


But this isn?t the kind of means test that Medicare negotiators now have in mind. Instead, they would force higher income seniors to pay more into the program.


This is a tax increase, plain and simple.


Medicare conference negotiators have been working since July to reconcile differences between the 1,043-page Medicare bill that passed the Senate and the 747-page bill approved by the House in June.


President Bush set an October 17 deadline for the committee to finish its work, but the deadline passed without a bill. One reason, says conference committee chairman Bill Thomas (R-CA), is that the committee is trying to fit $600 billion worth of ideas into a $400 billion budget allocation.


Negotiators are desperately searching for new revenues to pay for the Christmas tree that the Medicare bill is becoming, and taxing the rich is an easy target.


Higher income beneficiaries could pay more, but they should be able to do that by buying services on their own outside of Medicare. This would put less stress on Medicare and would motivate beneficiaries to be smarter consumers of health care services.


Forcing wealthy seniors to pay more into a government program that already is going bankrupt hardly is an innovative idea.


The proposed premium increase would be mandatory, not optional. This gets perilously close to the disastrous plan that Congress approved in 1988 to charge higher-income seniors more for catastrophic Medicare coverage. That bill was repealed a year later after seniors rebelled and beat with their umbrellas on the car of then Ways and Means Chairman Dan Rostenkowski.


Affluent Americans already pay more into the Medicare program in their working years because Congress eliminated a decade ago the income ceiling for Medicare payroll taxes. Does a Republican Congress want to take the next step in that march? Hopefully not.


Sen. Ted Kennedy (D-MA) threatened to filibuster the Medicare bill last summer after his colleagues approved a means testing amendment to the Medicare bill. This would have broken Medicare?s promise of solidarity, Kennedy said, to treat all beneficiaries alike.


The amendment was quickly reversed after Kennedy pulled out a podium and threatened to set up shop to filibuster the whole Medicare bill.


It?s unclear if this will be an Achilles? Heel of the Medicare bill in the next round of debate, but it is certain to light fires of opposition on both sides of the aisle over the coming weeks.

_______


Grace-Marie Turner is president of the Galen Institute, a not for profit research organization that focuses on free-market solutions to health reform. She can be reached at P.O. Box 19080, Alexandria, VA 22320 or galen@galen.org

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Seniors soon will face their biggest Medicare premium increase in a decade ? to $66.60 a month, starting next year ? while some congressional leaders are hatching plans to force affluent seniors to pay even bigger premiums in the future.


This is dangerous politics and backwards policy.


Health and Human Services Secretary Tommy Thompson announced in mid-October that Medicare premiums will rise next year to reflect higher health costs. By law, premiums that seniors pay must cover 25 percent of the costs of doctors? visits and other outpatient services financed through Medicare. Taxes pay the rest.


At the same time, congressional aides leaked to reporters the outline of a plan to force seniors with higher incomes — possibly $60,000 or $100,000 a year — to pay a bigger share of their Medicare premiums.


The plan comes from congressional negotiators wrestling through the details of the huge Medicare bills passed by Congress last summer.


They have an admirable goal ? to inject ?means testing? into Medicare. Done right, means testing would be a good thing.


The Medicare benefit would be ?tested? according to the ?means? of the beneficiaries. Lower income seniors would get more assistance ? by paying less, receiving more benefits, or both.


But this isn?t the kind of means test that Medicare negotiators now have in mind. Instead, they would force higher income seniors to pay more into the program.


This is a tax increase, plain and simple.


Medicare conference negotiators have been working since July to reconcile differences between the 1,043-page Medicare bill that passed the Senate and the 747-page bill approved by the House in June.


President Bush set an October 17 deadline for the committee to finish its work, but the deadline passed without a bill. One reason, says conference committee chairman Bill Thomas (R-CA), is that the committee is trying to fit $600 billion worth of ideas into a $400 billion budget allocation.


Negotiators are desperately searching for new revenues to pay for the Christmas tree that the Medicare bill is becoming, and taxing the rich is an easy target.


Higher income beneficiaries could pay more, but they should be able to do that by buying services on their own outside of Medicare. This would put less stress on Medicare and would motivate beneficiaries to be smarter consumers of health care services.


Forcing wealthy seniors to pay more into a government program that already is going bankrupt hardly is an innovative idea.


The proposed premium increase would be mandatory, not optional. This gets perilously close to the disastrous plan that Congress approved in 1988 to charge higher-income seniors more for catastrophic Medicare coverage. That bill was repealed a year later after seniors rebelled and beat with their umbrellas on the car of then Ways and Means Chairman Dan Rostenkowski.


Affluent Americans already pay more into the Medicare program in their working years because Congress eliminated a decade ago the income ceiling for Medicare payroll taxes. Does a Republican Congress want to take the next step in that march? Hopefully not.


Sen. Ted Kennedy (D-MA) threatened to filibuster the Medicare bill last summer after his colleagues approved a means testing amendment to the Medicare bill. This would have broken Medicare?s promise of solidarity, Kennedy said, to treat all beneficiaries alike.


The amendment was quickly reversed after Kennedy pulled out a podium and threatened to set up shop to filibuster the whole Medicare bill.


It?s unclear if this will be an Achilles? Heel of the Medicare bill in the next round of debate, but it is certain to light fires of opposition on both sides of the aisle over the coming weeks.

_______


Grace-Marie Turner is president of the Galen Institute, a not for profit research organization that focuses on free-market solutions to health reform. She can be reached at P.O. Box 19080, Alexandria, VA 22320 or galen@galen.org

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About the author