PNHP

Means testing Medicare

Democrats warm to Medicare change that late Sen. Edward Kennedy opposed

By Elise Viebeck
The Hill, December 8, 2012
Democrats in Congress are changing their tune on means testing in Medicare, an idea the late Sen. Edward Kennedy (D-Mass.) resisted for decades.
Leading Democratic lawmakers have suggested that raising premiums for wealthy Medicare beneficiaries could be a matter of common ground with Republicans in the ongoing deficit-reduction talks.
“I think that is reasonable and certainly consistent with the Democratic message that those who are better off in our country should be willing to pay a little more,” Senate Majority Whip Dick Durbin (D-Ill.) said Thursday.
The idea of affluence testing is not new ā€” wealthy Medicare recipients already pay higher premiums for doctor visits and prescription drug coverage.
But negotiations to avoid the so-called “fiscal cliff” open the door to new measures that would make Medicare costs more progressive based on income.
Last week, Senate Finance Committee Chairman Max Baucus (D-Mont.) called the idea “somewhat attractive” as a bargaining chip for talks on the so-called fiscal cliff.
Sen. Claire McCaskill (D-Mo.) remarked that “Donald Trump may need medication, but he certainly doesnā€™t need the government to pay for it.”
And Congressional Black Caucus Chairman Emanuel Cleaver (D-Mo.) called means testing a good way to bolster Medicare’s budget without cutting benefits.
“We already have a substantial amount of means-testing in the Medicare program ā€” most significantly, there is no cap on the income subject to the Medicare tax,” said (Rep. Henry) Waxman in a statement to The Hill.
“That is the right way to ask the better-off to pay more. And in fact, we also have means testing now of the Part B and Part D premiums. It is a mistake to go further.”
http://thehill.com/blogs/healthwatch/medicare/271795-dems-warm-to-medica…

Now that health care costs are unbearably high, Medicare must be progressively financed since moderate- and low-income individuals can no longer bear the full costs. A major step forward was the removal of the cap on wages subject to Medicare taxes, so higher income individuals pay more. The Affordable Care Act also added a new 0.9% Medicare tax for incomes over $200,000/$250,000.
In addition, in order to help cover Medicaid expansion and subsidies for the exchange plans, the Affordable Care Act also added a 3.8% tax on investment income, again for those with incomes over $200,000/$250,000. So we have already embarked on policies that make health care financing progressive, though we need to do more, but only on the financing end.
Medicare benefits should be the same for everyone. We should eliminate premiums and cost sharing, and we should expand benefits so that administratively wasteful Medigap and retiree health benefit programs are no longer necessary. Low income individuals should receive the same standard of care as the wealthy, just as was the intent in enacting the traditional Medicare program.
Introducing means testing, which we have already begun with Part B and Part D premiums, reduces support of wealthier beneficiaries who are annoyed by these additional charges. Once the principle of means testing is established, the budget hawks ratchet it up, driving wealthier individuals to look for private options, currently available as the Medicare Advantage plans. It is only one small additional step to introduce premium support – vouchers – where the wealthy will take their money and run. Once you lose support of wealthier individuals who have a strong political voice, then Medicare will descend down the path toward becoming a welfare program, like Medicaid.
We cannot allow this bipartisan attack on Medicare to proceed. Mobilize the forces!

Means testing Medicare

Ryan Says Rich Should Pay More as Sanders Defends Entitlements for Wealthy

By Brian Faler
Bloomberg, May 30, 2011

Bernie Sanders, the U.S. Senateā€™s only avowed socialist, may be the chamberā€™s fiercest advocate of taxing the rich to cut the federal deficit. That doesnā€™t mean he wants to reduce their Social Security and Medicare benefits.

Representative Paul Ryan, the Republican chairman of the House Budget Committee, wants to give the wealthy big tax breaks to encourage them to invest and create jobs. He also wants to take away many of their retirement benefits.

Democrats say Social Security and Medicare have endured because they offer benefits to people of all incomes, and accuse Republicans of trying to kill the programs by stripping away their beneficiaries, beginning with the rich. Republicans say the fairest way to curb the deficit is to scale back the programs for those who need them least.

With polls showing the public supports limiting benefits to the wealthy, and some Democratic leaders signaling a willingness to consider the idea, the rich may face cuts as lawmakers debate how to curb the national debt.

Sanders, 69, said the debate isnā€™t just about numbers.

ā€œThe strength of Social Security and Medicare is that everybody is in,ā€ the Vermont independent said in an interview. ā€œOnce you start breaking that universality and you say that if youā€™re above a certain income, two years later that income goes down and 10 years later it becomes a welfare program.ā€

Republicans say the waves of retiring baby boomers, as well as increasing health-care costs, are the real threats to the programs because the benefits are unsustainable.

ā€œThe thing that tears the social contract is insolvency,ā€ said Ryan, 41, a Wisconsin Republican. ā€œMeans-testing is an obvious solution to our fiscal problems,ā€ he said. ā€œThe alternative is everybody gets cut, so why donā€™t we put the money where it should go — to the people who need it.ā€

Representative James McDermott, a Washington Democrat, said providing benefits to those who donā€™t need them is a small price to pay to ensure the programs are available to everyone else.

ā€œI donā€™t worry about paying a few benefits to Warren Buffett or Bill Gates,ā€ he said. ā€œAs long as we make absolutely sure we got public supportā€ for the programs.

http://www.bloomberg.com/news/2011-05-31/ryan-says-rich-should-pay-more-as-sanders-defends-entitlements-for-wealthy.html

Comment: 

By Don McCanne, MD

Paying for health care and receiving health care are two different issues.

Under an ideal system, everyone should receive all essential health care services that they need without having to face financial barriers that might prevent them from accessing that care.

Since health care now has become so expensive that many cannot afford it, an ideal system would also finance that care based on the ability to pay. Those with greater means would pay more. Also, since the need for health care is very unevenly distributed, an insurance function of pooling the costs is absolutely essential.

Assuming that everyone gets the care that they need, there are two fundamental ways of paying for it. You can fund the entire costs in advance through a single risk pool. That is the simplest administratively and certainly would be the most equitable if each person contributed a given amount based on their means – most easily accomplished through progressive taxes.

The other way would be to establish a catastrophic risk pool through taxes or premiums that only partially fund care, and then assess cost-sharing payments (deductibles, co-payments, coinisurance) based on services received, at the time they are received. Since ability to pay remains an issue, to ensure access each individual would have to be means tested to determine what subsidies would be required (as in the Affordable Care Act). This greatly increases the administrative complexity and costs of financing care. The health care provider, the payer, and the patient each must account for each and every service and the allocation of responsibility for payment.

Although insurance premiums are normally thought of as a method of financing the risk pool, they have taken on a new twist in Medicare Part B (physician services) and Part D (drug benefit). Although these programs are partially funded through the tax system, the additional Part B and Part D premiums assigned to the individual beneficiaries are now means tested. In a sense, they are now accounted for as a means tested but negative benefit. The greater one’s means, the less the benefit. This is an important strategy  of the opponents of Medicare because it weakens the support of the more affluent members of our society and risks converting Medicare into a welfare program.

If all health care has already been prepaid by taxes paid into into a common risk pool, then none of this is necessary. The patient simply receives needed care, and that’s it.

Professor Leonard Rodberg, from Queens College/CUNY, has described this concept in these insightful comments (personal communication):

“The central feature of the Canadian health care system is not that it is a single payer system; it is that financial considerations do not enter into the patient’s decision to seek medical care, nor in the doctor’s decision on what treatment to recommend for the patient. It is not only that there is no exchange of money between patient and doctor; the patient has to pay no money for the visit at any time. There is no fighting with the insurance company to get a claim paid, and no complicated bookkeeping on the part of either the patient or the doctor.”

“We in PNHP have often observed that the term ‘single payer’ is not helpful in explaining what we mean by a national health program. I learned in Canada that it also doesn’t describe the essence of what we are seeking. We tend to treat the absence of cost-sharing as simply a feature of the single payer plan we want. I am now convinced that, instead, we should view the removal of financial barriers to care as the core of what we advocate: no billing of patients, no cash exchange between patient and provider, no checking with insurance companies, etc.

“Too often, we speak as if our goal is a single payer system. I believe that is a mistake. Our goal should be the removal of all financial barriers to care; a single payer system is simply a means, and not the only means, to that goal. What makes the Canadian system, and others, work so well is not its single payer character, but the fact that funding of the system is completely separated from the delivery of care. That should be what we seek through a national health program.”