WASHINGTON — The Concord Coalition today praised the 70 members of the
Senate who last night voted in favor of raising monthly Medicare premiums
for the affluent elderly, and urged President Clinton and members of the
House to support the measure.
WASHINGTON — The Concord Coalition today praised the 70 members of the
Senate who last night voted in favor of raising monthly Medicare premiums
for the affluent elderly, and urged President Clinton and members of the
House to support the measure.
"In the hundreds of public forums we have held in cities all across
America, means-testing has been the most popular proposal for saving
Medicare and Social Security for future generations," said Concord Co-Chair
Warren Rudman. "It’s an equitable solution not just for Medicare, but for
other entitlement programs as well."
"It’s simply not fair or sustainable to ask young working families who are
struggling to make a living to pay an ever-rising portion of health care
costs for well-off seniors," said Concord Co-Chair Sam Nunn. "While
Medicare reform must include much more than a means test, this measure
would introduce Americans to an idea that must ultimately be part of the
long-term solution."
The Concord Coalition has championed a means test for all entitlement
programs since its inception in 1992. The Concord version would begin
gradually reducing Social Security, Medicare and other entitlement benefits
for households exceeding $50,000 in annual income.
The proposal to means-test Medicare Part B premiums is not new to President
Clinton or Congress. President Clinton’s 1993 "Health Security Plan"
proposed raising the Part B premium for wealthy Americans. The 1995
Balanced Budget Act (reconciliation), passed by the House and Senate,
included a Medicare means-testing measure. Earlier this year, the
influential House Democratic Coalition, known as the "Blue Dogs,"
introduced an alternative balanced budget plan that includes a Medicare
means-testing proposal similar to the one the Senate passed last night.
Concord also applauded the Senate’s vote to begin gradually raising the age
of Medicare eligibility to 67. Savings from raising the age of eligibility
would be minor for several decades because of the phase-in and because the
youngest Medicare beneficiaries account for relatively little of the
programs costs. Once the Baby Boom generation begins retiring, however, the
savings would become significant.
Part B of Medicare covers doctors’ bills. Twenty-five percent of the
program’s costs are paid by Medicare beneficiaries through a monthly
premium of about $44. Even though the premium is set to cover 25 percent of
program costs, it is not permitted to rise faster than Social Security’s
cost of living adjustments. This means that as Medicare Part B costs rise
faster than inflation, the premiums gradually will cover less and less of
costs. By 2007, premiums will cover only 16 percent of program costs.
The remainder of Medicare Part B costs are financed through general
revenues. In effect, this means that Medicare Part B has an open pipeline
to the U.S. Treasury. And this pipeline will gush faster and faster.
In the future, as Part B premiums gradually finance less and less, and
general revenues finance more and more of program costs, the drain on the
Treasury will be about $850 billion by 2025. At the same time, Medicare
Part A’s annual deficit will reach $758 billion, and Social Security’s
deficit will be $478 billion. In that single year (2025), the combined
annual shortfall for these two entitlement programs (Medicare and Social
Security) will reach $2.1 trillion.
