October 11, 2007


Means Test Sought for Medicare Drug Plan (Jonathan Weisman, 10/05/07, Washington Post)

The Bush administration is advancing a proposal to levy higher premiums and deductibles on upper-income seniors enrolled in Medicare's new prescription drug benefit, raising fees on beneficiaries with incomes over about $80,000 a year, administration officials said yesterday. [...]

[Sen. John Ensign (R-Nev.)], who chairs the campaign committee responsible for electing Republicans to the Senate, is undaunted, vowing to add means testing to any Medicare measure that comes before the chamber.

"Working couples with incomes over $160,000 should not be subsidized by retired firefighters or schoolteachers," he said. "They should pay more of their share."

Already, the section of Medicare that pays for outpatient care, including doctors' fees, imposes some means testing. Single seniors with incomes exceeding $82,000 and couples with incomes above $164,000 pay higher premiums on a sliding scale as their wealth rises. Those thresholds rise each year with inflation.

The original Bush proposal would have frozen those thresholds at $82,000 and $164,000, so more seniors would have been affected by means testing over time. The same thresholds would have applied to the new prescription drug benefit.

According to the White House budget office, the proposal would have saved more than $10 billion over five years: $7.1 billion from the physicians' portion of Medicare and $3.2 billion from the drug coverage. The higher fees would have hit only the richest 4.3 percent of seniors enrolled in the drug program, Ensign said.

The new plan is likely to maintain inflation adjustments, Ensign said. But the senator was adamant that means testing be added to the drug benefit, and he said he has secured a strong White House commitment. The Finance Committee, of which he is a member, will probably take up legislation within weeks to stave off the scheduled cuts to physician reimbursements under Medicare. And Ensign said Democrats and Republicans will be looking for ways to pay for such efforts.

"I will be looking constantly for ways to put this before the Senate," he vowed yesterday.

The proposal will have the support of some budget hawks from both parties, who say a response to the looming crisis in entitlements must come before the heart of the baby boom begins drawing Medicare and Social Security benefits.

"Means testing is going to be a necessary part of all our entitlement programs," said Rep. Jim Cooper (D-Tenn.), who is seeking a new commission to tackle the issue. "We simply cannot afford the promises we've made."

Ron Pollack of the liberal advocacy group Families USA said an income-based surcharge could make sense, as long as the thresholds rise with inflation, the government does more to help the poor obtain coverage, and no one is excluded from the program.

"As long as this doesn't have an exodus of the wealthy from the program, we think having premiums established based on ability to pay makes sense," Pollack said.

Nothing is particularly wrong with the suggestion that more affluent seniors should pay more, said Scott Lilly, a budget analyst at the liberal Center for American Progress.

But politically, he added, the deal hinges on a betrayal of the coalition that Republicans painstakingly assembled to pass the prescription drug law in 2003. AARP's endorsement was particularly pivotal in securing its narrow passage, and it may never have happened had means testing been included, Lilly said.

The genius of the Ownership Society is that once you get universal savings programs--personalized SS, HSAs, baby bonds, personalized unemployment insurance, etc.--the application of a means test to receive the ultimate government benefit will bar virtually everyone. By being generous from birth you get to be stingy at death, instead of the far more costly and statist vice versa.

Posted by Orrin Judd at October 11, 2007 7:42 AM

Yes, but roll the tax into the general income tax and call it the welfare program it is.

Posted by: Rick T. at October 11, 2007 8:20 AM

Senator Ensign's comments were particularly unfortunate:

"Working couples with incomes over $160,000 should not be subsidized by retired firefighters or schoolteachers," he said. "They should pay more of their share."

Perhaps he may forgotten that they have also paid into Medicare for decades and continue to do so as long as they work. Payroll taxes for Medicare are not capped, so people who make more have paid a lot more into it.

I agree that means-testing is inevitable, however this kind of lazy and divisive rhetoric is not likely to win him many fans.

Posted by: Kurt Brouwer at October 11, 2007 2:06 PM

That would be foolish because it would leave the money to the state even as the cost of the program diminishes to zero.

Posted by: oj at October 11, 2007 2:16 PM

"Working couples with incomes over $160,000 should not be subsidized by retired firefighters or schoolteachers," he said. "They should pay more of their share."
Give me a break, if there were ever two groups earning more in retirement than when they "worked" it is these two.
Sorry if I don't "worship" firefighters, most "retire" in their 40's due to some vague disability, while teachers, on the job or not, get paid for failure to perform their "job".
If they are a "public employee" and belong to a union, they all do, then they are screwing the rest of us to a degree not even Bill Clinton reached.

Posted by: Mike at October 11, 2007 11:17 PM