President Joe Biden unveiled a plan Tuesday that aims to protect Medicare for the next generation.
What You Need To Know
- President Joe Biden unveiled a plan Tuesday that aims to protect Medicare for the next generation
- The plan, which he says will be included in his budget proposal, would raise taxes on Americans earning at least $400,000 a year
- It also would expand Medicare’s power to negotiate lower prices with drug companies
- Biden’s proposal – particularly the plan to raise taxes – is likely to face stiff resistance from Republicans, who control the House
The plan, which he says will be included in his budget proposal, would raise taxes on Americans earning at least $400,000 a year, close tax loopholes on high earners and expand Medicare’s power to negotiate lower prices with drug companies.
“Medicare is more than a government program,” Biden wrote in an op-ed for The New York Times. “It’s the rock-solid guarantee that Americans have counted on to be there for them when they retire.”
His proposals would extend the solvency of the Medicare trust fund by at least 25 years, the Medicare Office of the Chief Actuary estimates. The most recent projection had the trust fund drying up by 2028.
Biden called for raising the Medicare tax rates on earned and unearned income above $400,000 from 3.8% to 5%. The additional revenue would go directly into the trust fund.
The president justified the proposed tax hike by arguing that income inequality has deepened since Medicare was created nearly 60 years ago.
“Let’s ask them to pay their fair share so that the millions of workers who helped them build that wealth can retire with dignity and the Medicare they paid into,” Biden wrote.
The president also wants to close loopholes that he said have allowed some wealthy Americans to pay less on Medicare taxes by shielding some of their pay in claiming it is neither earned nor investment income.
Biden also wants to expand Medicare’s power to negotiate with pharmaceutical companies on the prices of more drugs. He estimates that would create $200 billion in savings, which also would be deposited in the trust fund.
Last year’s Inflation Reduction Act ended a ban on Medicare negotiating with drug companies on the price of high-cost drugs, but it only covers certain medicines.
The president also said his plan would lower out-of-pocket costs on medicines for Medicare recipients.
Biden’s proposal – particularly the plan to raise taxes – is likely to face stiff resistance from Republicans, who control the House.
“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. Some have threatened our economy unless I agree to benefit cuts,” Biden wrote.
“Only in Washington can people claim that they are saving something by destroying it.”
During his State of the Union address last month, the president faced jeering from Republicans when he claimed some GOP members have proposed policies that could lead to Medicare and Social Security cuts.
House Speaker Kevin McCarthy has said such cuts are “off the table” in talks to raise the debt limit, although some GOP lawmakers — including former Vice President Mike Pence, Sen. Ron Johnson of Wisconsin and the Republican Study Committee — have called for entitlement reform that could result in cuts.
The president wrote the GOP’s “plans that protect billionaires from a penny more in taxes — but won’t protect a retired firefighter’s hard-earned Medicare benefits — are just detached from the reality that hardworking families live with every day.”
Biden, meanwhile, said “MAGA Republicans” — those most loyal to former President Donald Trump — want to repeal the Inflation Reduction Act that gave Medicare the power to bargain with drug makers and capped the price of insulin for Medicare recipients at $35 a month out of pocket. If they get their way, Biden wrote, “seniors will pay higher out-of-pocket costs on prescription drugs and insulin, the deficit will be bigger, and Medicare will be weaker. The only winner under their plan will be Big Pharma.”
Trump himself has cautioned Republicans against cutting Medicare and Social Security.
Spectrum News has reached out to the offices of McCarthy and Senate Minority Leader Mitch McConnell, R-Ky., for comment on Biden’s plan.