2003-10-28 - Means Testing Will Help Kill Medicare


High Premiums for the Rich Won't Help Medicare
by Saul Friedman
Source: Newsday | October 25, 2003

It seems an appealing idea for lawmakers who are considering a
Medicare drug benefit and how to pay for it: Charge the most affluent
among the 40 million Medicare beneficiaries higher premiums. But it's
a death trap for the nation's most popular heath insurance program.

It's called "means-testing" and the House-Senate committee putting
together a Medicare bill is considering tripling the yearly Medicare
Part B premiums from the current $700 to more than $2,100 for
beneficiaries with incomes of $60,000 or $100,000, depending on whose
version is adopted.

Charging wealthier patients more to get Medicare's services seems so
reasonable that it has the support of prominent friends of Medicare,
including Sen. Dianne Feinstein (D-Calif.), economist Robert
Reischauer and former Social Security Commissioner Robert M. Ball. And
a few Gray Matters readers see nothing wrong with making the rich pay
more for Medicare.

As I read the positions of AARP, the Medicare Rights Center and
others, although they are steadfastly against means- testing the
benefits of Medicare, they may be willing to consider means-testing
the premiums. Their reasoning is that premiums based on income would
not violate the principle of universality because the benefits would
be equal, regardless of income.

Why is universality so important? Consider why all who drive are
required by most states to have auto insurance. If those who can
afford to pay their own way after an accident don't buy insurance, the
"risk pool" shrinks and may not suffice to cover accident victims who
can't afford the out-of-pocket costs.

Medicare Part B, let me remind you, is entirely voluntary. And if Part
B is not financially attractive, people who can afford it will go
elsewhere. Charging higher premiums, no matter the rationale, really
means cutting benefits, says Don McCanne, president of Physicians for
a National Health Program, for Part B premiums are part of the
beneficiary package, which means the affluent will net less.

And as there is no mandate to join Medicare Part B, McCanne added, "if
beneficiaries walk away from the Medicare program" to buy their own
insurance (as congressional conservatives hope), they will take their
premiums out of the risk pool. "Means-tested premiums give
higher-income individuals much greater incentive to walk away," he
said. Indeed, the congressional Medicare-wreckers are attempting to
supply greater incentive to leave the program in favor of private
insurance. As you may know, the monthly Part B premium is going up
next year by 13 percent, to $66.60. But as part of the drug bill, the
lawmakers intend to raise the yearly Part B deductible, impose higher
co-payments and new co-payments on laboratory services while cutting
benefits on services such as home care.

And the drug benefit these cuts and raises are supposed to pay for is
measly and full of holes. So why should the affluent stick with
Medicare? How long will it be before benefits are based on income? And
what happens to traditional Medicare if the wealthier enrollees leave?
Feinstein has said that "high-income beneficiaries can afford to pay a
larger share of Medicare's costs." Sure they can, but they also can
afford to buy better insurance than Feinstein and her colleagues are
about to deliver.

Besides, the more affluent Medicare beneficiaries have paid more in
payroll taxes that went to Medicare and many with high incomes are
paying taxes on 80 percent of their Social Security benefits, much of
which is earmarked for Medicare.

There is another point: Exactly how will the means of the affluent be
tested? The poor, who get help paying the monthly Medicare premium
from Medicaid funds, know about the humiliations of means tests when
they apply. They are obliged to bare their bank accounts, tax returns
and their souls for some bureaucrat and swear they are not cheating.

How will the affluent be required to prove they are not too rich to
pay the higher premium? Will the feds believe them because the
affluent tell the truth? Will they have to disclose their tax returns?
To whom - the Medicare means-testing police? What income figure will
be used? Adjusted gross? Or gross? Will earnings from equities count
as income? What about privacy? What benefits will be withdrawn if the
figures are fudged? What if they need those benefits to save their
lives? What happens if illness wipes out their affluence? No one has
spoken to these issues so far.

Another valid and interesting point is raised by reader Jim Hoops of
East Northport, a 43-year-old public school teacher, who describes
himself as "a very conservative Republican." His 80-year-old parents
would have been buried by medical bills but for Medicare, he said. He
is "totally against means- testing Medicare premiums" because "it will
turn higher-income folks against it." And, he asks, why should people
be penalized for having been responsible and lucky enough to become
affluent? Wouldn't that be class discrimination? McCanne said: "The
social insurance contract calls for the same benefits for everyone.
Let's not break that contract."

Yale's Medicare authority, Theodore Marmor, writing with welfare
expert Jacob Hacker, said: "The means-testers on the right have found
a political wedge issue that splits Medicare advocates on the left.
But those worried about low-income citizens should not fall into the
trap. ... This seemingly sensible step forward represents a
fundamental step backward. It should be rejected, as it was by
Medicare's founders."