In an op-ed for The New York Times, President Joe Biden vows he will not cut Medicare. Unlike his Republican “friends,” he recognizes that turning Medicare into a voucher program, does not strengthen Medicare but rather weakens and destroys it. President Biden’s budget is designed to keep Medicare strong through 2050, without cutting people’s health care benefits, so that Americans can retire with dignity.
Medicare is an earned benefit, for which Americans contribute all their working lives. There is no cap on Medicare payroll contributions as there is with Social Security contributions. The more money you earn, the more you pay in. This money funds the Medicare Part A Hospital Trust Fund, which is currently projected to take in less than it pays out in 2028.
President Biden appreciates that Medicare delivers good value and could deliver better value still. The Republicans’ voucher program would simply shift more health care costs onto older adults and people with disabilities with Medicare.
The Affordable Care Act strengthened Medicare, as did the Inflation Reduction Act, which finally gives Medicare the power to negotiate drug prices, penalizes pharmaceutical companies that raise prices faster than inflation and limits out-of-pocket drug costs if you have Medicare. All of these policies reduce the deficit by $159 billion.
Biden’s plan is to do more to lower drug prices for people with Medicare, giving more negotiating power to the federal government. He says it would save another $200 billion, which could then go towards strengthening the Medicare Trust Fund.
Biden also wants to increase people’s payroll contribution into Medicare 1.2 percent–from 3.8 percent to 5 percent–and to tax unearned income above $400,000 at that rate as well. Biden would put that money in the Medicare Trust Fund as well. Biden justifies the additional contributions for wealthy Americans because today the most wealthy one percent of Americans are five times wealthier than the 50 percent who are leas wealthy.
In sharp contrast, Republicans want to block Medicare from negotiating prescription drug prices. They want to remove the $35 a month cap on the cost of insulin for people with Medicare. They want people to spend whatever it takes for their drugs or go without them, not to limit their costs to $2,000 a year as the Inflation Reduction Act does. They want Big Pharma to win.
Curiously, Biden does not propose a massive revision to the way the government pays Medicare Advantage plans, as a way to strengthen Medicare. The current Medicare Advantage payment methodology has cost Medicare more than $120 billion to date in overpayments and is projected to cost $600 billion dollars more in overpayments over the next eight years. Probably, Biden fears the health insurance industry’s weaponization of such a proposal to scare people in Medicare Advantage.
Thankfully, the Centers for Medicare and Medicaid Services, which oversees Medicare, has already proposed a revision to the way it pays Medicare Advantage plans that will rein in some, though not enough, of their massive overpayments. Since it will mean lower profits, the insurance industry’s pushback has been fierce. Let’s hope the government’s proposal is finalized.
Here’s more from Just Care:
- Experts comment on CMS proposed payment changes to Medicare Advantage plans
- Members of Congress urge administration to end overpayments in Medicare Advantage
- Ten ways to improve Medicare Advantage
- To strengthen Medicare, it should cover everyone
- Comment to CMS on its proposed changes to the way it calculates Medicare Advantage payments in 2024
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