Democrats aim to expand Medicare despite trust fund bankruptcy

Democrats aim to expand Medicare despite trust fund bankruptcy

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It’s a seemingly inconsistent situation: Democrats in Congress want to expand Medicare benefits, while a trust fund that supports the program is threatened with bankruptcy.

Indeed, some Republican lawmakers have seized on this growing problem to oppose a proposal to add dental, vision and hearing coverage to Medicare. The provision is included in the Democrats’ $ 3.5 trillion 10-year spending plan that would expand the social safety net and tackle climate change, among other political goals.

“Democrats are reeling from further reckless Medicare expansion, as if it was years before bankruptcy,” R-Texas Rep. Kevin Brady said in prepared remarks at ‘a House Ways and Means Committee session on Thursday, as the parties’ debate began. . The Democrats’ big legislative package.

Due to the structure of Medicare, adding dental, vision and hearing coverage will have little impact on the trust fund which is expected to go bankrupt in 2026.

“In essence, we’re talking about a wide variety of different pots of money,” said David Lipschutz, associate director and senior policy counsel at the Center for Medicare Advocacy.

Medicare has approximately 62.8 million beneficiaries, most of whom are at least 65 years of age or older. This is the age at which most Americans must enroll unless they encounter an exclusion (such as having qualified health insurance elsewhere).

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Basic health insurance includes part A (hospitalization insurance) and part B (outpatient care coverage). There is also part D, which is prescription drug coverage. About 44% of beneficiaries choose to receive these benefits through an Advantage plan (Part C), an option offered by private insurance companies that may include limited coverage for dental, vision and hearing. .

Put simply, it is the Part A trust fund that faces a shortfall from 2026, according to the latest report from the trustees. Unless Congress steps in, the fund will be able to pay about 91% of Part A claims early this year.

This trust fund derives most of its income from dedicated taxes paid by employees and employers.

Typically, workers pay 1.45% through payroll withholding tax (although an additional 0.9% is imposed on income over $ 200,000 for single taxpayers or 250 $ 000 for married couples). Employers also contribute 1.45% on behalf of each worker. The self-employed essentially pay both the employer’s and the employee’s share.

The expansion of Part B benefits will not have a direct impact on the solvency issues facing the Part A Hospital Insurance Trust Fund.

Tricia newman

Executive Director of the Kaiser Family Foundation Medicare Policy Program

Meanwhile, Part B – which is covered by Extended Benefits – is funded from general federal government revenues, as well as monthly premiums paid by Medicare beneficiaries. The same goes for Part D. And each year the bonus and income allocations are adjusted to reflect the projected expenses and to ensure that there is no deficit.

“The extension of Part B benefits will not have a direct impact on the solvency issues facing the Part A Hospital Insurance Trust Fund,” said Tricia Newman, Executive Director of the Part A Hospital Insurance Trust Fund. Kaiser Family Foundation’s Medicare Policy Program.

Still, she said, adding dentistry, vision and hearing would impact overall Medicare spending. A 2019 congressional report, based on a bill that would have combined these benefits, estimated the cost at $ 358 billion.

However, the Democrats’ current spending plan also includes a goal to allow Medicare to negotiate with drugmakers – which is currently restricted – as a possible way to help pay for expanded benefits.

“The prescription drug savings will be used to offset these new costs… but there are many competing spending priorities for the savings,” Newman said.

The Democrats’ massive legislative package is in the early stages of debate. In addition to adding Medicare benefits, some Democrats want to include a lower Medicare eligibility age (currently 65).

Other health care-related goals include expanding premium subsidies for health insurance through the Public Procurement Act of the Affordable Care Act – now only in effect for 2021 and 2022 – and in states that have not extended Medicaid. It provides coverage to eligible people. .

It is not clear whether the legislation on which the vote ends will include everything that is debated – or whether the current details of the various provisions will be changed. For expanded Medicare benefits, the House measure will implement visual and hearing coverage in 2022 and 2023, respectively, while dental benefits will not begin until 2028.

“It’s the closest we’ve got since the program’s inception to adding these benefits,” said Lipschutz of the Center for Medicare Advocacy.

“It looks like if we don’t take this opportunity another one won’t present itself for a long time,” he said.

Newman said that for bankruptcy issues with Part A trust funds, there are several options that can help resolve the issue. For example, Medicare can deduct payments to providers (hospitals, qualified nursing facilities, etc.) or Advantage plans. Or, the cost-sharing, ie the deductible or the co-payment, can be increased for the beneficiaries.

Alternatively, additional sources of funding can be identified. This could include making sure some taxpayers can’t dodge Medicare’s employment tax – which has been proposed by Democrats as a means of increasing income – or redirecting other taxes to trust funds. .

“None of the policy options are politically attractive, but at some point Congress will need to address the issue to ensure that recipients get the benefits to which they are entitled and that claimants are paid.” It does, ”Newman said.

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