Medicare Is Already Means-Tested, Cont.
http://www.offthechartsblog.org/medicare-is-already-means-tested-cont/
Posted by: Paul N. Van de Water
Posted in: Congressional Action, Federal Budget, Health Policy, Medicare
Even Greg Mankiw apparently did not realize a point I made in a post last month: “while Medicare coverage is nearly universal among people age 65 and older and all beneficiaries are eligible for the same services, high-income beneficiaries already pay much more for those benefits.”
Citing House Speaker John Boehner’s statement that we “consider means-testing Medicare,” Mankiw outlined the option of raising Medicare premiums for higher-income seniors.
But, as I explained, upper-income people already pay higher premiums for Medicare’s Supplementary Medical Insurance (or SMI, the part that pays doctor bills) and the Medicare prescription drug benefit than other beneficiaries do. High-income taxpayers also pay more for Medicare’s Hospital Insurance (HI).
Policymakers may still want to raise Medicare premiums further for upper-income people to strengthen the program’s long-term finances. But, in considering such a step, they need to understand that Medicare is already means-tested.
More About Paul N. Van de Water
Paul N. Van de Water is a Senior Fellow at the Center on Budget and Policy Priorities, where he specializes in Medicare, Social Security, and health coverage issues.
Full bio | Blog Archive | Research archive at CBPP.org
In response to something Greg posted in his blog a year or more ago about marginal tax rates, I sent him a comment noting the infinite marginal rate associated with the break points in the income-related extra premiums paid on Part B of Medicare. The similar but much smaller extra premium on Part D has since been added. Greg an I have known each other for many years, so I am quite sure he would have read my detailed message. Two other points: (1) as far as I know, there is no extra premium on HI–at least I am not paying one. (2)Social Security is responsible for providing the income figures on which the higher premium is based, relying primarily on tax returns from prior years. They do a terrible job dealing with changes in income levels, including those associated with retirement. That gives one great pause in thinking about the massive job Social Security will have to do when the income-related taxes and subsidies in the ACA have to be calculated.