Washington [US], March 8: President Joe Biden on Tuesday said he'll propose increasing taxes on some upper-income business owners and expanding prescription drug cost controls enacted in last year's budget reconciliation package as a means of lowering federal deficits and extending Medicare's solvency.
The provisions, which will be included in Biden's fiscal 2024 budget request coming Thursday, are designed to add about 25 years to the life of Medicare's Hospital Insurance trust fund, according to a fact sheet the White House released.
"The budget I am releasing this week will make the Medicare trust fund solvent beyond 2050 without cutting a penny in benefits," Biden wrote in a New York Times op-ed posted Tuesday morning.
Medicare's actuaries said last year that reimbursements to providers out of the trust fund would have to be reduced starting in 2028 because of a persistent revenue shortfall. The Congressional Budget Office, using a different methodology and updated data, said earlier this year that the date of trust fund exhaustion would some in 2033.
The proposals have little chance of being enacted under a GOP-control House, and the new taxes and prescription drug pricing provisions would face a steep climb even if Democrats still ran both chambers.
Drug pricing During last year's talks on what became the final climate and health care budget reconciliation law, Democratic leaders had to scale back their ambitions on drug price controls, the centerpiece of which was Medicare's ability to negotiate prices. It would also require pharmaceutical firms to pay rebates to Medicare when prices grow faster than inflation.
The final carefully-negotiated package, signed off on by top Democrats in both chambers sympathetic to drug industry concerns, was projected to save $159 billion over a decade.
Biden now wants to save another roughly $200 billion by expanding the price negotiation provisions to more drugs - and move up the start date to sooner after new medicines launch. It would also expand the reconciliation law's rebates to drugs covered by commercial insurance, a provision that didn't make the cut in the budget package since it ran afoul of arcane rules governing reconciliation bills.
That money would be parked in the Medicare trust fund, which would help prolong its life.
Medicare tax The second major prong of Biden's Medicare proposals also ran into static with some Democrats last year, not to mention a fierce business lobbying blitz.
Currently, upper-income workers and business owners pay a combined 3.8 percent payroll tax on salaries above $200,000 for individuals and $250,000 for married couples filing jointly, after the 2010 health care law increased the worker share of the tax by 0.9 percent above that threshold. That Medicare payroll tax currently finances the hospital insurance fund.
Another provision in the 2010 law imposed a 3.8 percent tax on the "unearned" income of individuals and households making more than the $200,000 and $250,000 thresholds, including capital gains and dividends from stock and other investments.
The tax also hits upper-income earners who hold shares in "pass-through" businesses like partnerships and S corporations, but aren't actively involved in running the business. Revenue from the so-called net investment income tax goes into general revenue, not Medicare.
Biden wants to increase both taxes to 5 percent for income above $400,000, apply the net investment income tax to active business owners earning more than that threshold, and divert all of the new revenue into the Medicare hospital insurance fund.
That's a significant expansion of his similar proposal in recent years which would have expanded the existing 3.8 percent investment income tax to active business owners. That proposal won tentative support from key Democratic centrist Sen. Joe Manchin III of West Virginia last year, before being jettisoned in the final bargaining over what became a slimmed-down budget package.
Other changes Finally, the White House said Biden's budget will propose capping cost-sharing at $2 a month per prescription for certain generic drugs covered under Medicare Part D, including those "used to treat chronic conditions like hypertension and high cholesterol," the fact sheet said.
Among other changes, the budget also will propose: eliminating out-of-pocket expenses for three mental health or other behavioral health doctor visits per year; require Medicare coverage for new types of providers, like peer support workers and certified addiction counselors; and remove "unnecessary limitations on beneficiary access to psychiatric hospitals." If similar proposals didn't go anywhere in an all-Democratic Congress, they're even less likely under GOP control of the House.
But proposing them in his budget allows Biden to draw a contrast with his Republican foes as he gears up for a likely campaign for reelection in 2024, and ahead of fraught talks this summer to raise the statutory debt limit.
"If the MAGA Republicans get their way, 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," Biden wrote in the New York Times.
Source: Qatar Tribune
