They say some beneficiaries of Medicare will have to take a hit. About whom are they speaking and what does that mean?
I was thinking hypothetically as an analyst, what if Medicare followed these rules:
- Persons living on Social Security income deduct the cost of Medicare once they are retired.
- Persons who make $10,000 greater than Social Security income and increments of $10,000 thereafter pay 10% tax on each increment with the revenue going to Medicare.
- When the amount paid by a taxpayer equals the amount of benefit they will receive, the incremental tax is stopped.
Think about the dynamics of such a plan. All persons who can afford to pay their own way do so. If additional revenue is needed to cover an actuarial deficit, then a tax can be applied to increments of income such that the Medicare deficit is closed by those who have the means. That is the type of program that we need to hear about from Congress.
If the beneficiaries can afford to take a hit, then no one feels the pain. If too many American seniors on Medicare would feel pain as a result, then we need to do with fewer guns, i.e. cut the defense budget.
Adjusting the eligibility age (retirement age) and means testing are alright to consider now.
“The cold, hard realities behind Medicare cuts
By JENNIFER HABERKORN and PAIGE WINFIELD CUNNINGHAM | 12/2/12 6:57 PM EST
Democrats have said they can cut Medicare spending without touching seniors’ benefits. But here’s the reality: They can’t get several hundred billion dollars out of Medicare without at least some beneficiaries taking a hit.
And that could be a big problem if the framework for a fiscal cliff deal calls for $400 billion in entitlement savings — most of which would be likely to come from Medicare.
Republicans insist that entitlements should be part of a deal because they’re the largest drivers of the nation’s debt. But Democrats insist they won’t agree to any Medicare savings that would trim benefits — and that’s exactly what would happen with some of the biggest savings options that have circulated in recent years.
POLITICO has reported that $400 billion in entitlement savings is likely to be the floor in an eventual deal and that the Medicare cuts are likely to be a combination of raising the eligibility age, means testing and “efficiencies.”
But if President Barack Obama and Congress do agree to phase in a higher eligibility age — which, technically, wouldn’t touch “benefits” — many of those near-retirees would have to pay more for their health coverage. And if health care providers get hit with another round of cuts — the other big potential source of savings — in addition to the ones already on the way in the health care law, they’re warning that some of them won’t survive.
Here are some of the biggest cost-saving options:
Increase the Medicare eligibility age from 65 to 67: $148 billion
Most Democrats on Capitol Hill have lined up against the idea, arguing that doing so would leave 66- and 67-year-olds without access to affordable coverage. Plus, the 66- and 67-year-olds aren’t the ones sinking the Medicare trust fund; they’re typically the cheapest beneficiaries.
But they likely would become the costliest in the private insurance market, which could make coverage hard to find if they don’t already have it through the workplace — and they’d probably have to pay more out of pocket than they would under Medicare.
“Many of the people who would otherwise have enrolled in Medicare would face higher premiums for health insurance, higher out-of-pocket costs for health care, or both,” the Congressional Budget Office wrote in a January analysis of the idea.
An ABC News/Washington Post poll released Wednesday shows that 67 percent of people surveyed oppose the idea, too.
But many Republicans back the idea, and it was included in House Budget Committee Chairman Paul Ryan’s budget. They say Medicare needs to adjust to the times. In 1965, 65 was old. Today, it’s not.
And they have one prominent supporter: Obama tentatively agreed to raise the eligibility age during his summer 2011 debt ceiling negotiations with House Speaker John Boehner.
Ryan’s plan would have pushed off any changes for 10 years and then gradually increased the eligibility age over 10 years.
Increasing the Medicare Part B premium to 35 percent of costs: $241 billion
This is by far the biggest saver — but it’s also one that would clearly violate the Democrats’ pledge not to shift costs to seniors.
Read more: http://www.politico.com/story/2012/12/medicare-cuts-84493.html#ixzz2DzQDFbY7