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Baucus, Durbin Say There's Room to Restructure Medicare Premiums

By Emily Ethridge, CQ Roll Call

December 4, 2012 -- Top Senate Democrats recently signaled a willingness to charge wealthier Medicare beneficiaries higher premiums as part of a deficit-reduction deal that would find savings from entitlement programs.

Senate Finance Chairman Max Baucus said that adding a means test to Medicare premium rates is a "somewhat attractive" idea as part of negotiations.

"It could well be one of the pieces that's necessary to get a solution," said Baucus, D-Mont.

Republicans also have backed the idea, which would require Medicare participants with a certain income level to pay higher premiums for services. The program already does this to some degree, but a deal could either have those beneficiaries pay more in premiums, or increase the number of people paying the higher level.

Senate Majority Whip Richard J. Durbin also said he would be amenable to increasing premiums for wealthier beneficiaries. "I think that's reasonable, and I think it's consistent with my viewpoint," said Durbin, D-Ill. "Our taxes as well as our programs should be progressive. Those who are better off shouldn't receive the same level of benefits as those who are not."

Currently, Medicare beneficiaries with $85,000 in income a year as individuals, or $170,000 for married couples, pay higher premiums for Part B services, which includes doctor services, outpatient care, and physical and occupational therapy.

"Medicare already has a means test, so I think there's been some misconceptions about this," said Ron Wyden, D-Ore. "I would be willing to look at that."

"The heart of the Medicare agreement, though, has got to first start with the proposition to try to lay out the sensible policies that are going to undergird the number—the savings part—to be looked at," he added. "You have got to make some judgments about what else you can do so that Medicare continues to be a program attractive to all."

Democrats are pushing to let the President George W. Bush-era tax cuts expire at the end of this year on Americans with more than $200,000 in individual income or $250,000 for married couples. Charging higher premiums from wealthier Medicare participants would be another way to get more money from higher-income earners.

The idea of means-testing Medicare has come up in several spending reduction talks before, including last year's joint deficit reduction committee and a failed Senate GOP payroll tax extension proposal.

Treasury Secretary Tim Geithner said Dec. 2 on NBC's "Meet the Press" that the Obama administration had proposed "to modestly increase premiums for high-income beneficiaries of Medicare."

But Democrats are not yet as willing to back another Republican-supported change to Medicare: raising the program's eligibility age.
Wyden said he wanted to ensure that all retirees would have adequate coverage, saying he felt the eligibility age issue would be more significant in deficit-reduction talks than means testing.

"Any debate over raising the retirement age must start with how you're going to protect vulnerable seniors who have done hard physical labor who are having a real challenge even hanging on physically until the current age," Wyden said.

Wyden said the health insurance exchanges created in the 2010 health care law (PL 111-148, PL 111-152), are not an automatic solution, because seniors could still be subject to higher premiums through insurance rating bands.

Durbin echoed Wyden's concerns, which he said he has discussed with the president "in passing."

"I have to have some assurance that the exchange system is working, providing accessible affordable health insurance for early retirees—let's say retirees who have not reached the age of eligibility," he said.

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