Before rolling out his Administration’s proposed budget today, President Biden authored a New York Times guest essay titled “Joe Biden: My Plan to Extend Medicare for Another Generation” (March 7, 2023). The same day, the White House released a document titled “FACT SHEET: The President’s Budget: Extending Medicare Solvency by 25 Years or More, Strengthening Medicare, and Lowering Health Care Costs”.
In these documents, the Administration outlines its intent to extend the solvency of the Medicare Part A Trust Fund “by at least 25 years” through a budget that “achieves these gains with no benefit cuts—indeed, while lowering costs for Medicare beneficiaries.”
According to the FACT SHEET, the budget proposes to do so by:
- “Modestly increasing the Medicare tax rate on income above $400,000” – up to 5% from 3.8%;
- “Closing loopholes in existing Medicare taxes and dedicating the Medicare net investment income tax to the HI [Part A] Trust Fund” – including by ensuring that loopholes that allow higher earners to shield income from tax “by claiming it is neither earned income nor investment income” are closed; and
- “Crediting savings from prescription drug reforms to the HI Trust Fund” – would “build on drug price reforms by strengthening Medicare’s newly established negotiation power, allowing Medicare to negotiate prices for more drugs and bringing drugs into negotiation sooner after they launch”, amounting to $200 billion in savings over 10 years.
The FACT SHEET states that these proposals would also lower out-of-pocket costs for beneficiaries in several ways, including by reducing drug costs, capping Part D cost-sharing on certain generic drugs at $2 per month, and lowering certain behavioral health costs in Medicare.
The Center for Medicare Advocacy recognizes that budgets offered by the President – regardless of Administration or party – are not often adopted by Congress, but they do offer a vison and blueprint for action. The Center applauds the President’s approach to strengthening Medicare’s finances by both achieving greater savings through prescription drugs and other means and by seeking additional revenue from those who can afford it.
One thing missing from this proposal, however, is further reining in overpayments to Medicare Advantage plans, which are costing the program billions each year. While CMS is taking some nominal steps to do so, as discussed in this recent Center for Medicare Advocacy statement, much more is needed. Similar to proposals raised during the Build Back Better discussions of 2021, we urge the President and Congress to rein in MA overpayments and redirect those savings into expanding Medicare coverage in traditional Medicare – such as adding dental, vision, hearing coverage and an out-of-pocket cap – which would benefit all people with Medicare, not just those enrolled in private Medicare Advantage plans.
As the Center reviews the details of the Medicare-related provisions of the President’s proposed budget (the proposed HHS budget is available here), we applaud the broad goals of shoring up the program’s solvency without cutting benefits.
March 9, 2023 – D. Lipschutz