Soaking the rich won’t save Medicare.
It might even doom the huge federal health insurance program. Which would be a shame, because along with Social Security it’s the stretch of the social safety net upon which both rich and poor depend.
And no, my conservative friends, I’m not trying to sneak one past you. On this particular issue, even port-siders like myself need to admit it would be a mistake to force wealthy retirees to pay more for their Medicare coverage.
It’s simply not worth the ill will that would be stirred up among the wealthy few. And this program, believe me, is going to need all the support it can get.
Soaking the rich, or “means-testing Part B premiums” as the wonks put it, will be a big issue in the weeks ahead. Once again President Bill Clinton and Republican congressional leaders are out to save Medicare from bankruptcy . . . and do it in a such a way as to make the other side look like idiots.
We have seen this movie before. The last time the GOP Congress talked about scaling back benefits and increasing premiums, prior to the 1996 presidential election, Flexi-Bill and his handlers shamelessly wielded Medicare as their most lethal campaign cudgel. The Democrats pretended the program just needed some fine-tuning. They claimed Republicans were out to gut the program to finance tax breaks for the rich.
The former claim was an outright lie (Medicare is going broke faster than you can say “Baby Boomers”) and the latter was a fib made plausible by the awkward fact that the dollar amount of the proposed tax cuts was thisclose to the proposed Medicare scale backs. Nothing happened.
Now that he has been re-elected, however, our president has had time to go over the balance sheets and discover anew that Medicare really is in trouble. If nothing is done, according to consensus estimates, Medicare’s Part A (hospital insurance) trust fund–the part funded by a 2.9 percent payroll tax–will slip into the red in just two or three years. That’s a full decade before the first Boomers start collecting benefits. When that happens, the program’s deficit explodes, soaring by the year 2030 to $12 trillion, or roughly three times today’s entire national debt.
This obviously isn’t going to happen. Between now and then, either the entire shebang will have been “restructured” as the euphemism goes or we Boomers will have been murdered in our beds by our spectacularly overtaxed children.
What’s going on now in Washington is the first, timid attempt to defer or diminish the day of reckoning.
And on balance, the proposals coming out of the House and Senate, while not nearly enough to avoid the Boomer meltdown, seem honest attempts at buying some time. A lot of us had hoped to retire at 65, but slowly pushing eligibility out to 67 (by 2027) is a logical concession to both economic reality and human longevity. Allowing Part B premiums to rise over time so as to cover a quarter of the cost of doctors’ fees and outpatient services is another bow toward common sense. As for the proposed $5 co-payment for home visits, it’s important that everyone understand–including your mama–that nothing is free.
But means-testing Part B premiums? It’s simply not worth the potential political grief. It’s not even fair, if the “f” word can be used in defense of the well-off.
Under the proposal recently passed out of the Senate, some 2 million seniors with incomes above $50,000 ($75,000 and above for couples) would see their Part B premiums float up above that 25-percent-of-cost level. And steeply. For singles in the $100,000 (couples with incomes above $125,000) bracket, premiums that now cost $43.80 a month would shoot up to nearly $200.
The first and most obvious problem here is that the very well-off, having lost their government subsidy, might just quit the voluntary Part B program altogether. There will be no shortage of insurance companies willing to write hybrid policies for the wealthiest and (income being a predictor of well-being) healthiest 5 percent.
As for fairness, wealthy seniors are already paying a disproportionate share of the income taxes that fund the 75 percent Part B subsidy. A senior single making $100,000 annually chips in about $1,000 a year to Part B.
Means-testing Medicare premiums also will require a raft of additional paperwork, especially if tax-a-phobic GOP partisans insist the extra premium be collected not by the IRS (which would make it look like a tax increase) but by the Department of Health and Human Services, which isn’t equipped to collect premiums.
Worst of all, though, would be the psychological impact of forcing the wealthy to pay more. Instead of everybody’s old-age health insurance plan, Medicare would begin looking like another redistributive welfare program.
Not that I have anything against redistributive welfare programs, per se. It’s just that they’ve been losing public support faster than Mike Tyson, and are being slashed accordingly.
Besides, even if every wealthy senior stayed and paid, jacking their premiums would only raise about $7 billion over the next five years. Sounds like a lot. But that’s less than 1 percent of all Medicare spending.
So I say it’s best not to soak the rich (and powerful). We’re just starting the job of saving Medicare. We’ll never finish without them.
