President Joe Biden on Tuesday unveiled a plan to extend Medicare’s solvency into the 2050s by raising taxes on high-income Americans and cutting prescription drug costs, a proposal that Biden presented as an alternative to GOP attacks on the healthcare program used by tens of millions of seniors.
“If the MAGA Republicans get their way, seniors will pay higher out-of-pocket costs on prescription drugs and insulin, the deficit will be bigger, and Medicare will be weaker,” the president wrote in an op-ed for The New York Times. “The only winner under their plan will be Big Pharma. That’s not how we extend Medicare’s life for another generation or grow the economy.”
According to an outline released by the White House on Tuesday morning, Biden’s proposal would “extend the solvency of Medicare’s Hospital Insurance (HI) Trust Fund by at least 25 years” by raising the Medicare tax rate from 3.8% to 5% on both earned and unearned income above $400,000.
“When Medicare was passed, the wealthiest 1% of Americans didn’t have more than five times the wealth of the bottom 50% combined,” Biden wrote Tuesday, “and it only makes sense that some adjustments be made to reflect that reality today.”
The plan also proposes empowering “Medicare to negotiate prices for more drugs and bringing drugs into negotiation sooner after they launch,” building on provisions of the Inflation Reduction Act that Biden signed into law last year. The White House plan would then credit the savings from the drug price reforms — an estimated $200 billion over 10 years — to the HI Trust Fund.
The Medicare plan is part of the president’s sweeping fiscal year 2024 budget blueprint, scheduled for release later this week. The budget will likely include a range of administration proposals that don’t stand a chance of clearing the Republican-controlled House.
In its 2022 report, the Board of Trustees for Social Security and Medicare projected that the HI Trust Fund — Medicare Part A — “will be able to pay scheduled benefits until 2028, two years later than reported” in 2021.
“At that time,” the trustees report noted, “the fund’s reserves will become depleted and continuing total program income will be sufficient to pay 90% of total scheduled benefits.”
In his Times op-ed, Biden declared that “we should do better than that and extend Medicare’s solvency beyond 2050.”
“Let’s ask the wealthiest to pay just a little bit more of their fair share, to strengthen Medicare for everyone over the long term,” the president wrote. “This modest increase in Medicare contributions from those with the highest incomes will help keep the Medicare program strong for decades to come. My budget will make sure the money goes directly into the Medicare trust fund, protecting taxpayers’ investment and the future of the program.”
Biden put forth his plan as he continues to face progressive criticism for operating a pilot program called ACO REACH, which physicians warn could result in the privatization of traditional Medicare.
The president’s plan also comes amid a debt ceiling standoff that Republicans are attempting to exploit to secure long-sought cuts to federal programs. House Republicans have also floated changes to Medicare, including an increase in the program’s eligibility age.
“MAGA Republicans on the Hill say the only way to be serious about preserving Medicare is to cut it,” Biden wrote in a Twitter post on Tuesday. “Well, I think they’re wrong. I’m releasing my budget this week. In it, I’ll propose a plan to extend the life of Medicare for a generation, without cutting benefits.”
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