President Joe Biden previewed a plan to extend the solvency of Medicare “at least into the 2050s” without cutting benefits Tuesday, an opening salvo as he prepares to release his full budget proposal later this week.
Currently, Medicare’s hospital-insurance fund is expected to fall short of full coverage in 2028.
The White House is set to roll out the plan in full Thursday.
Biden wants to lift the Medicare tax rate on earned and unearned income above $400,000 from its current 3.8 percent to 5 percent. Part and parcel with that, he wants to close the loopholes used by “high-paid professionals and other wealthy business owners” to wiggle out of paying that Medicare tax, per the White House.
“When Medicare was passed, the wealthiest 1 percent of Americans didn’t have more than five times the wealth of the bottom 50 percent combined, and it only makes sense that some adjustments be made to reflect that reality today,” Biden wrote in a guest essay in the New York Times.
Biden’s plan would redirect and enhance a relatively new revenue stream from the Inflation Reduction Act to Medicare’s coffers. The IRA allowed Medicare to negotiate the price of some high-cost drugs, and required the drug companies to pay a rebate to the program if they increased costs faster than inflation. Biden’s proposal would extend that rule to commercial health insurance, and channel those savings — which the White House estimates will amount to $200 billion over 10 years — into the Medicare trust fund.
He also introduced two cost-cutting measures: a $2 cap per prescription per month on cost-sharing for certain generic drugs, and eliminating cost-sharing for three mental health or behavioral health visits per year.
“For decades, I’ve listened to my Republican friends claim that the only way to be serious about preserving Medicare is to cut benefits, including by making it a voucher program worth less and less every year,” Biden wrote in the Times. “Some have threatened our economy unless I agree to benefit cuts.”
The White House has been hammering Republicans for their plans to cut Medicare and Social Security for months, browbeating Speaker Kevin McCarthy (R-CA) into saying that cuts to the programs are off the table. Republicans had been mulling demanding cuts to the programs in exchange for their votes to lift the debt ceiling, without which the country would default on its debts for the first time in history. On top of the recent rumblings, the GOP has also been pushing for cuts to the programs for decades.
While ideas have been offered up in media appearances and budget proposals by various groups, House Republicans have not coalesced behind a single set of cuts in exchange for releasing their debt-ceiling hostage.
The President’s annual budget proposal is often little more than a messaging document, a way for the White House to convey its priorities even if the majority of those proposals have no path through Congress. As staunchly averse as Republicans are to raising taxes on the wealthy, the Medicare solvency proposal would face a very steep climb in the House.