No More ‘Hands Off’ Medicare Says Joe Biden: Social Security and Medicare are often considered “hands off” by politicians. These programs are extremely popular and even a whiff of potential change makes for controversy and substantial push back from Americans, especially senior citizens.
The problem is that Social Security and Medicare are insolvent by trillions of dollars and need reform soon if they are to pay out promised benefits decades into the future.
Tinkering With Payroll Taxes for Medicare
President Joe Biden has given into the pressure and proposed changes to Medicare, specifically raising Medicare taxes on wealthier wage earners that would keep the medical insurance plan solvent until 2050.
Raise Taxes on the Wealthy
The new tax would go from 3.8 percent to 5 percent on annual income that is more than $400,000 a year. This is part of Democrat’s yearning to “tax the rich.”
The proposal may enable the Medicare’s Hospital Insurance Trust Fund to be extended by at least 25 years.
“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,” Biden wrote in a New York Times column.
Joe Biden Seeks to Beat Republicans to the Punch
Biden has said that he is willing to reform the programs and if the Republicans don’t like it then they can draft their own changes to save Medicare and extend the life of the health insurance for senior citizens.
The Biden proposal is part of the negotiations with Congressional Republicans to raise the $31.4 trillion debt limit.
The Rich Can Afford It
The president claimed that this increase is modest.
The changes will reflect the reality that wealthy people can afford to pay more in payroll taxes since “The wealthiest 1 percent of Americans didn’t have more than five times the wealth of the bottom 50 percent combined,” he wrote.
Reform Medicare or Lose It
The White House believes that Medicare could undergo some more changes. The idea is to close loopholes the wealthy use to pay less into Medicare. The Inflation Reduction Act also has stipulations that will improve Medicare, the Biden administration believes.
Save Costs on High Costs of Prescription Drugs
The law allows for Medicare to negotiate for lower prices on expensive drugs.
These provisions will also be in the latest budget proposal from the White House. This could save $200 billion in Medicare funds over the next ten years, Biden believes.
Medicare faces problems staying solvent. The trust fund could run out of money by 2028.
Will This Really Save Medicare?
Taxing the wealthy is a common refrain you hear from Biden and his Democrat allies. It remains to be seen just how much revenue the payroll tax hike on high wage earners will generate for the Medicare trust fund.
So far, there are no plans to change the age at which people can apply for Medicare. That is one way that the trust fund could increase its value. Changing the age requirements would be politically unpopular as many people do not have healthcare after they retire. The House Republican Study Committee thinks that raising the eligibility age for Medicare to 67 could help the program stay afloat for longer.
Democrats Recognize the Need for Entitlement Reform
But it is interesting that the president is finally admitting that change is necessary to the main entitlement programs that the federal government spends so much money on. Biden has called Medicare a “rock-solid guarantee that Americans have counted on to be there for them when they retire.”
The Debate on Payroll Taxes
Republicans generally believe high payroll taxes take away money that Americans can spend on goods and services. Democrats believe that tax cuts supported by Republicans favor the rich. The higher payroll tax on Medicare may see resistance in the GOP-controlled House of Representatives as Joe Biden tries to push through his budget proposal and raise the debt limit with Republican resistance.
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Author Expertise and Experience:
Serving as 19FortyFive’s Defense and National Security Editor, Dr. Brent M. Eastwood is the author of Humans, Machines, and Data: Future Trends in Warfare. He is an Emerging Threats expert and former U.S. Army Infantry officer. You can follow him on Twitter @BMEastwood. He holds a Ph.D. in Political Science and Foreign Policy/ International Relations.