Within the context of Medicare reform, means testing involves scaling Medicare benefits according to income. Generally, this means that higher-income beneficiaries pay a larger portion of their health care expenses (for example, through higher premiums and co-payments). More extensive means testing for Medicare has been proposed as a way to reduce spending in the program. This could put the program on a more sustainable path while protecting enrollees who are least able to afford their health care costs.
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Premiums for Medicare Part B are already tied to beneficiaries’ income levels. In some cases, higher-income beneficiaries also pay more for Medicare Prescription Drug Plans (Part D), although this varies by plan.
President Barack Obama said during debt limit and spending cut negotiations in 2011 that he would be open to expanded means testing for Medicare to make the program more sustainable. However, in November 2012, White House spokesman Jay Carney wouldn’t say whether means testing was still on the table for Obama as an option in ongoing negotiations to avoid the “fiscal cliff,” according to ABC News.
Other policymakers have voiced support for means testing to reduce the deficit. Rep. Emanuel Cleaver (D.-Mo.)—chairman of the Congressional Black Caucus—has said more aggressive means testing would be preferable to cutting benefits if reductions in Medicare spending must be made.
Sens. Dick Durbin (D-Ill.), Max Baucus (D-Mont.) and Claire McCaskill (D-Mo.) have also indicated they would be open to means-testing Medicare as part of a deal to avoid the fiscal cliff.
Following Obama’s announcement that he is open to expanded means testing, AARP Senior Vice President Joyce Rogers voiced his organization’s opposition to the idea, saying that Medicare isn’t a welfare program and means testing seniors’ earned benefits will erode popular support for the program.
Other critics of expanded means testing in Medicare as a deficit-reduction strategy have argued that it wouldn’t result in much savings since there aren’t many enrollees wealthy enough to afford significant cost-sharing. Another concern is that it will punish those who work the hardest and save the most money, discouraging people from accumulating wealth and harming the economy.
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