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| Health and Human Services (HHS) Secretary Kathleen Sebelius testifies on Capitol Hill in Washington, Friday, April 12, 2013, before the House Ways and Means Committee hearing on President Barack Obama's budget proposal for fiscal year 2014, and the HHS. |
WASHINGTON
(AP) -- President Barack Obama's plan to raise Medicare premiums for
upper-income seniors would create five new income brackets to squeeze
more revenue for the government from the top tiers of retirees, the
administration revealed Friday.
First details
of the plan emerged after Health and Human Services Secretary Kathleen
Sebelius testified to Congress on the president's budget. As released
two days earlier, the budget included only a vague description of a
controversial proposal that has grown more ambitious since Obama last
floated it.
"Means testing" has been part of
Medicare since the George W. Bush administration, but ramping it up is
bound to stir controversy. Republicans are intrigued, but most Democrats
don't like the idea.
The plan itself is complicated. The bottom line is not: more money for the government.
Obama's
new budget calls for raising $50 billion over 10 years by increasing
monthly "income-related" premiums for outpatient and prescription drug
coverage. The comparable number last year was $28 billion over the
decade.
Currently, single beneficiaries making
more than $85,000 a year and couples earning more than $170,000 pay
higher premiums. Obama's plan would raise the premiums themselves and
also freeze adjustments for inflation until 1 in 4 Medicare recipients
were paying the higher charges. Right now, the higher monthly charges
hit only about 1 in 20 Medicare recipients.
House
Budget Committee Chairman Paul Ryan, R-Wis., asked Sebelius about the
new proposal on Friday, noting that it would raise significantly more
revenue. Part of the reason for the additional federal revenue is that
Obama's 2014 budget projects an additional year of money from the
proposals. The rest of the answer has to do with the administration's
new brackets.
Starting in 2017, there would be nine income brackets on which the higher premiums would be charged. There are only four now.
If
the proposal were in effect today, a retiree making $85,000 would pay
about $168 a month for outpatient coverage, compared to $146.90
currently.
Under current law, the next bump up
doesn't come until an individual makes more than $107,000. Under
Obama's plan, it would come when that person crosses the line at
$92,333. If the plan were in effect today, the beneficiary would pay
about $195 a month for outpatient coverage under Medicare's Part B,
rather than $146.90.
The top income step -
currently more than $214,000 - would be lowered to $196,000. And
individuals in the new top tier would pay 90 percent of the cost of
their outpatient coverage, compared to 80 percent currently.
The administration did not provide a comparable table for the effects on married couples.
The
impact on monthly premiums for prescription drug coverage is hard to
calculate, since different plans on the market charge varying premiums.
Sebelius
told lawmakers the Medicare proposals in the budget are intended to
strike a balance between cutting health care spending to reduce the
deficit and maintaining services for people who depend on them.
"This
proposal would improve Medicare's long-term financial stability by
reducing the federal subsidy for people who can afford to pay more for
their coverage," said Medicare spokesman Brian Cook.
