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Can't raise taxes? Hike Medicare premiums instead

By Richard Alonso-Zaldivar

Associated Press

LAST UPDATED: 09:54 a.m. HST, Dec 13, 2011

WASHINGTON >> Raising taxes on millionaires may be a non-starter for Republicans, but they seem to have no problem hiking Medicare premiums for retirees making a lot less.

The House is expected to vote Tuesday on a year-end economic package that includes a provision raising premiums for "high-income" Medicare beneficiaries, now defined as those making $85,000 and above for individuals, or $170,000 for families.

Some would pay as much as several hundred dollars a month additional for Medicare outpatient and prescription coverage. Millions who don't consider themselves wealthy would also end up paying more.

Just the top 5 percent of Medicare recipients currently pay higher premiums, a change that took effect a few years ago. The new GOP proposal would expand that over time to include the highest-earning one-fourth of seniors.

On Monday the White House was mum on the Republican Medicare proposal, while AARP said it's tantamount to a new tax. In the Democratic-led Senate, there's not much enthusiasm.

The plan is modeled on a proposal that President Barack Obama submitted earlier this year to congressional debt negotiators, when he was seeking a "big deal" to cut federal deficits. Continuing pressure to curb spending means the proposal eventually could become the law of the land, even if there's no consensus now.

"This is an idea that seems to have some traction," said Tricia Neuman, a Medicare expert for the nonpartisan Kaiser Family Foundation.

It's also creating a lot of confusion about who is wealthy and who is not.

For example, when Obama talks about raising taxes on the rich, he means individuals making more than $200,000 a year and families above $250,000.

But his health care law fixed the level for paying "high-income" Medicare premiums at the current $85,000 and above for an individual, $170,000 for families.

And the new Republican plan would drop the thresholds to $80,000 for an individual and $160,000 for families.

"If we're considering raising taxes on those with incomes above $250,000, then it seems to me very awkward to raise Medicare premiums on those with much lower incomes," said John Rother, head of the National Coalition on Health Care, an advocacy group.

Baby boomers just signing up for Medicare are more likely to be affected than long-term retirees, since incomes tend to be higher for the newly retired.

AARP calls the proposed premium increases a tax hike. "Most of the time, when you have a payment due to the government because of your income, we call it a tax," said lobbyist David Certner. "It's a form of a tax." High-earning workers already pay more in Medicare payroll taxes, he pointed out.

No way it's a tax, say Republicans. Taxpayers subsidize three-quarters of the cost of Medicare's outpatient and prescription coverage for the typical retiree. Reducing a subsidy for those who can afford to pay more is not the same thing as raising taxes, they contend.

"The proposal doesn't raise taxes," said Michelle Dimarob, spokeswoman for House Ways and Means Chairman Dave Camp, R-Mich. "The provision simply adjusts the subsidy they receive."

To back their argument, Republicans are circulating a letter from anti-tax activist Grover Norquist in support of the broader bill containing the Medicare provision.

The premium hikes are to help pay for legislation that would prevent the Jan. 1 expiration of payroll tax cuts for workers and extra benefits for the long-term unemployed, while also staving off a steep cut in Medicare payments to doctors. With time running short, lawmakers of both parties are still far apart on key aspects of the package.

Tax or not, higher Medicare premiums mean less money in the pockets of those who have to pay. Currently the high-income premiums start at 35 percent of the cost of Medicare's outpatient and drug coverage for individuals making $85,000 year, and rise to 80 percent of the cost at the very top income brackets.

Next year, a typical Medicare recipient will pay $131 a month for outpatient and drug coverage combined, according to Kaiser. Those paying the high-income premiums will pay from $183 to $417. That means beneficiaries at the highest income levels would pay nearly $300 a month more.

The House GOP plan would increase the high-income premium by 15 percent in 2017 and lower the thresholds at which the higher fees kick in.

Most significantly, it freezes those income thresholds indefinitely, until one-fourth of Medicare recipients are paying "high-income" premiums. It's unclear how long that would take, but currently only about 2 million out of 47 million Medicare beneficiaries pay higher premiums. Eventually that number would easily surpass 10 million.

The GOP proposal would reduce taxpayer spending on Medicare by $31 billion over 10 years; Obama's version saved about $20 billion.

"There's a lot of interest in asking higher-income people on Medicare to contribute more," said Neuman.

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entrkn wrote:
The GOP has become a fascist organization...
on December 13,2011 | 09:00AM
allie wrote:
This comment has been deleted.
on December 13,2011 | 09:13AM
Kuniarr wrote:
Those with an ax to grind against the GOP needs to examine closely what the news item is all about. The GOP is not proposing an increase in medical premiums for the poor. Is an individual who has retired - yes retired - earning $85,000 a year or more a "poor" individual? Of course not.
on December 13,2011 | 12:37PM
hybrid1 wrote:
Is a millionaire/billionaire a "poor" individual? Of course not. So why does the republicans want to incease the premium (read TAX) ib tge middle class but NOT on the rich 1 percent?
on December 13,2011 | 01:02PM
Kuniarr wrote:
Hybrid1,the news item is about increasing the Medicare premiums of individuals earning $85,000 and above or families earning $170,000 or above. "Or above", hybrid1 means that the rich 1% are included.
on December 13,2011 | 01:19PM
FluidMotion wrote:
I applaud your effort Kuniarr, but you're talking to sheep. Wish the 99% would learn to read.
on December 13,2011 | 07:45PM
nodaddynotthebelt wrote:
The GOP does not care about the majority. They only care about themselves and their rich constituents. To tax the retirees more so in place of taxing the ridiculously rich is totally wrong. And guess, what? We, the majority who struggle to pay our bills and taxes have to watch this whole thing play out. The rich have come up to bat and then turned around and left us while we are in the ninth inning of a losing game. They would rather see the rest of us suffer while they enjoy their luxuries. Just like the multimillionaire who pays only $300 in property tax while a retiree has to pay over a thousand dollars. The rich have manipulated the system beginning with the Bush era. The route we have taken will lead to more gouging by the rich at the expense of those who are not. Something needs to be done and it has to be done at the polls. It is really crazy that the poor and those struggling vote for these GOP swindlers.
on December 13,2011 | 09:17AM
Kuniarr wrote:
You are mistaken. The news item you are commenting on is about increasing the medical premiums not of the poor but of the wealthy or upper middle class who have retired and are on Medicare.
on December 13,2011 | 12:25PM
bullturd wrote:
Hey-I'm a 77 year old medicare sucking senior citizen. Here's a suggestion I got in one of my emails. To help save the economy, the Government will announce next month that the Immigration Department will start deporting seniors (instead of illegals) in order to lower Social Security and Medicare costs. Older people are easier to catch and will not remember how to get back home. I started to cry when I thought of you. Then it dawned on me ..... oh, crap ..... I'll see you on the bus!
on December 13,2011 | 09:43AM
dihudfan wrote:
so the republicans would rather take money away from the poor and let the rich get richer? don't make any sense... the rich can afford to pay, they have money, the poor don't have money, and the republicans want to take more from the poor??????
on December 13,2011 | 10:24AM
Kuniarr wrote:
You are mistaken, Dihudfan. The news item you are commenting on is about increasing the medical premiums not of the poor but of the wealthy or upper middle class who have retired and are on Medicare.
on December 13,2011 | 12:22PM
Maipono wrote:
The Board of Trustees for Medicare's hospital trust fund reported to Congress in 2007, that the fund will be insolvent by 2017. If nothing is done, then there will be no Medicare. You could increase taxes, borrow money, or make changes to Medicare to make it more manageable. But doing nothing is not an option. If you tax all the money from the top 1% of the population, in other words, take all their wealth away, like in communist countries, we will still be insolvent. So before you start to criticize the Republicans, who are trying to do something about it, think, and don't make knee jerk responses.
on December 13,2011 | 10:57AM
realist3463 wrote:
We need a co-pay for visits to a doctor. No co pay for the first visit for an illness but one for a subsequent visit for the same illness.
on December 13,2011 | 12:21PM
Kuniarr wrote:
Those with an ax to grind against the GOP needs to examine closely what the news item is all about. The GOP is not proposing an increase in medical premiums for the poor. But on individuals who have retired earning $85,000 a year or more or families (usually husband and wife) earning $170,000 a year or more.
on December 13,2011 | 12:40PM
frontman wrote:
This left slanted BS is more for a dirty tabloid than a newspaper.
on December 13,2011 | 12:46PM
hawaiikone wrote:
You're right, But the sad thing is that most of the dolts who read this dribble just automatically lash out at the GOP.
on December 13,2011 | 02:40PM
saveparadise wrote:
I have no problem with them charging more for an individual that makes 85,000 a year nor a couple that brings in 170,000 . That is very well to do as far as I am concerned. Go for it.
on December 13,2011 | 12:57PM
Maneki_Neko wrote:
Next year, a typical Medicare recipient will pay $131 a month for outpatient and drug coverage combined, according to Kaiser. Those paying the high-income premiums will pay from $183 to $417.

If you and spouse unit are pulling down $170,000/year as retirees, this increase isn't going to hurt at all. Big whoop. Congratulations to Republicans for actually doing something besides whining and carping. I agree we should tax the rich at higher rates, much higher in fact, but this story was not about that, it was just a slam job against the GOP. Pretty tawdry stuff.
on December 13,2011 | 01:47PM
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