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Two Key Senate Democrats Endorse Medicare Means Testing, Standalone Doc Fix

Wednesday, December 5, 2012

Two leading Senate Democrats Dec. 4 endorsed expanded means testing for some recipients of Medicare benefits, as part of a comprehensive deficit reduction plan.

In separate comments, Richard J. Durbin (D-Ill.), the Senate Democratic whip, and Max Baucus (D-Mont.), chairman of the Senate Finance Committee, told BNA that they will also support a standalone “doc fix” to adjust Medicare provider reimbursements in 2013, if there is no comprehensive agreement on avoiding the so-called fiscal cliff by January.


 

Senate Finance Committee Chairman Max Baucus said he considered a Medicare means test “somewhat attractive” as a potential option to help reach an overall agreement on avoiding the fiscal cliff.  

 


On means testing Medicare benefits, Durbin said: “I think that's reasonable and consistent with my view that our taxes as well as our programs should be progressive.”

Commenting as he entered the Democratic caucus's weekly luncheon, Durbin added, “Those who are better off shouldn't receive the same level of benefits of those who are not.”

A means test for wealthier Medicare beneficiaries could result in their paying higher Medicare premiums as well as larger copays for services.

Baucus, speaking as he left the Senate floor, said he considered a Medicare means test “somewhat attractive” as a potential option to help reach an overall agreement on avoiding the fiscal cliff, a combination of tax increases and across-the-board cuts in the discretionary budget.

Medicare is already a means-tested program, with beneficiaries earning more than $85,000 a year paying more for Part B and Part D premiums. The comments by Durbin and Baucus likely relate to a proposal included in the Obama administration's proposed fiscal year 2013 budget. That proposal would raise the income-related Medicare premium by 15 percent and also freeze the income level for higher payments at $85,000 until at least 25 percent of Medicare beneficiaries were paying the higher premiums.

If lawmakers and the White House fail to reach an agreement on an alternative plan, the tax increases and budget cuts--totaling some $600 billion--will take place automatically Jan. 1, potentially throwing the nation's economy into a recession, according to some economists.

Asked about the possibility of a separate doc fix in the absence of a comprehensive deficit reduction agreement this year, Durbin told BNA: “We almost have to because without it the reimbursement for providers goes down 25 to 30 percent. That could be devastating.”

Baucus, responding to the same question, said he “wanted one.” He added, “I hope we can do it this year.”

Opposition to Increase in Medicare Eligibility Age.

Durbin said he is not in favor of raising the Medicare eligibility age, another proposal under discussion as part of the deficit reduction negotiations.


 

Regarding increasing the eligibility age for Medicare, Senate Democratic Whip Richard J. Durbin said: “That troubles me … I'm worried about gaps in coverage for those who are retired and not eligible for Medicare.”  

 


“That troubles me,” he said of the proposal. “I've discussed it with the president and said I'm worried about gaps in coverage for those who are retired and not eligible for Medicare. I have to have some assurance the exchange system is working and providing accessible, affordable health insurance for early retirees who have not reached the eligibility age for Medicare.”

In a counteroffer made to President Obama Dec. 3, House Speaker John Boehner (R-Ohio) proposed cutting $600 billion from Medicare and Medicaid, in part by increasing the Medicare eligibility age from 65 to 67. The proposal would also apply an unspecified formula for means testing Medicare benefits (232 HCDR, 12/4/12).

The Republicans were responding to the Obama administration's initial proposal, offered Nov. 28, which included $1.6 trillion in new revenue over 10 years, principally by ending the Bush-era tax cuts and higher taxes on the top 2 percent of income earners. The proposal also included some $400 billion in additional savings from Medicare and other federal entitlement programs, without specifying how they would be achieved.

As part of the negotiations over the debt limit in August 2011, the president said he would consider raising the Medicare eligibility age, but he has been silent on the issue in the current deficit talks.

In the same 2011 debt limit negotiations, Obama also agreed to means test Medicare for higher-income beneficiaries. A proposal made in those negotiations by Rep. Eric Cantor (R-Va.), the House majority leader, would have saved the government an estimated $38 billion by charging higher-income beneficiaries 10 percent more for the cost of hospital stays and prescription drugs.

Doc Fix Legislation Now Routine.

To avoid mandatory cuts in Medicare provider reimbursements, required by the “sustainable growth rate” (SGR) formula, Congress routinely enacts a so-called doc fix canceling the cuts.

The SGR was enacted as part of the 1997 Debt Reduction Act to control Medicare spending by linking it to the nation's economic growth rate. Since then, Medicare spending has outpaced the nation's economic growth, putting political pressure on lawmakers each year to pass a doc fix. The current doc fix will expire Jan. 1, when provider rates are scheduled for a 30.9 percent reduction under the SGR formula.

By Ralph Lindeman  

 

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