Add this to the long list of odd "class warfare" stories we've already seen in 2011: Republicans will fight to the death against any higher taxes on the wealthy, but they have no problem boosting Medicare premium rates paid by affluent seniors.
The GOP-led House approved legislation last week that would expand existing surcharges on Medicare premiums paid by high-income seniors. This was a provision within a broader bill that extends the current reductions in payroll taxes and extends jobless benefits; the bill also blocks scheduled cuts in Medicare payments to doctors and curtails certain environmental regulations.
At this writing, it's not clear where the GOP plan will go -- if anywhere. But it caught my eye because it's not the first time politicians have gone to the well on Medicare premiums. In fact, there's a long bi-partisan history of hitting up high-income Medicare beneficiaries to pay for one thing or another.
Since 2006, the most affluent seniors have been paying higher income-related premiums on Medicare Part B (doctor visits and outpatient services). Those charges were added under the Medicare Modernization Act of 2003, which was signed by President George Bush.
The surcharges were expanded under President Obama's health care reform law, the Affordable Care Act (ACA). And the President proposed boosting high-income premium surcharges further last summer as part of a "grand bargain" with Republicans on deficit reduction, which fizzled. That plan would have boosted premiums on wealthy seniors, applied means-testing to benefits and, perhaps, raised the Medicare eligibility age to 67.
Currently, high-income Medicare premiums are paid by individuals with $85,000 or more in annual income, and joint tax filers with income over $170,000. The surcharges scale upwards through four income brackets. Currently, the high income surcharges affect just 5 percent of seniors, but they are on track to hit 14 percent by 2019 under the ACA. The surcharges are applied to Medicare Part B and Part D (prescription drugs).
The ACA expands the number of seniors paying premium surcharges over time by changing a provision that had indexed the income brackets to inflation; the law freezes the threshold at 2010 levels through 2019, starting this year. That effectively brings more seniors into the high-income category as incomes rise.
In 2012, the standard monthly art B premium will be $99.90. But a single-filing senior with income from $85,000 to $107,000 will pay $139.90. In the highest bracket -- joint filers with income from $214,000 to $428,000, the surcharge will be $319.70 per month. That means wealthy seniors will pay nearly $220 per month in surcharges just for Part B.
The surcharges help offset the cost of health-care reform by reducing taxpayer subsidies on Medicare services for wealthy seniors. The Kaiser Family Foundation has estimated that the higher premiums will save taxpayers nearly $36 billion this decade.
The Republican plan advanced this week would expand the income surcharges to include 25 percent of seniors over time by freezing the income thresholds indefinitely, and by increasing the premium by 15 percent in 2017.
I don't doubt that seniors with income at these high levels can afford the surcharges. But why not simply call this what it is -- a tax on the wealthy? Granted, it's levied as a premium for health care services, but not because those services are any more expensive to provide to seniors of varying means. It's simply a means of generating revenue.
Raising the income tax on the wealthy would be more fair, since it would spread the pain more evenly among all age groups. And, it would raise more revenue. For example, creating a series of higher brackets for the very wealthy -- as proposed by Rep. Jan Schakowsky (D-IL) would raise at least $78 billion annually.
But that would force politicians to use the word "tax," instead of "premium." Don't hold your breath on that one.
Read more: High-Stakes Battles Target Social Security, Medicare and 11 Retirement Benefit Changes Coming in 2012
© 2011 TRIBUNE MEDIA SERVICES, INC.
Comments:
The government needs to concentrate on Medicare Fraud more aggressively. There is so much abuse amongst both the provider and patient sector. Increasing premiums on the wealthy for Medicare Part B is simply not equitable since the risk profiles for individuals over age 65 do not vary significantly.