This morning President Biden had an op-ed in the New York Times sketching his plan to “save” Medicare. Here’s the plan:
My budget will 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. That’s another $200 billion in deficit reduction. We will then take those savings and put them directly into the Medicare trust fund. Lowering drug prices while extending Medicare’s solvency sure makes a lot more sense than cutting benefits.
Second, 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. My budget proposes to increase the Medicare tax rate on earned and unearned income above $400,000 to 5 percent from 3.8 percent. As I proposed in the past, my budget will also ensure that the tax that supports Medicare can’t be avoided altogether. 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.
I don’t object to either of those changes in principle and I actually agree with the reasoning President Biden presents:
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.
If incomes had continued to grow at the rates they had up until just about the time that Medicare was enacted, neither Social Security nor Medicare would have the problems they do now.
I’ll reserve judgment on whether those measures will produce the results President Biden says they will until after actual legislation is drafted and the Congressional Budget Office weighs in. The phrase “earned and unearned income” troubles me especially from a practical standpoint. Also, the highest earners have strategies available to them unavailable to the rest of us. That makes relying on them for increased revenue iffy.
Well, I was wrong. I thought no one would tackle this until the last second. Good for Biden, but TBH it did have to be a Democrat to address this. Republicans talk about cutting Medicare/SS or raising eligibility age, another form of cut but when push comes to shove they deny what they have said or even written into their official plans and claim they never want to change benefits. If you cant/wont address benefits then you have to add revenue and the GOP cant do that since raising taxes means you get primaried.
Allowing Medicare to negotiate drug prices has been suggested by a few Republicans/libertarians int he past, but I will predict that the GOP largely attacks this part. First, because they dont want Biden to do anything successful and second because they will support Big Pharma. To be clear, Dems who get a lot fo support from Big Pharma will not like this plan either but Suspect most get in line. (A lot of this will take the form of innovation will be stifled.)
Steve
I agree with that.
There is nothing that stifles innovation so much as big companies dominating the market. Their idea of innovation is acquiring an innovative company and then squashing the life out of it.