Two leading Senate Democrats Dec. 4 endorsed expanded means testing for some
recipients of Medicare benefits, as part of a comprehensive deficit reduction
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.
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
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.”
Durbin said he is not in favor of raising the Medicare eligibility age,
another proposal under discussion as part of the deficit reduction
“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,
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.
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