It’s a seemingly incongruous situation: Congress Democrats want to expand Medicare benefits while a program-backed trust fund faces insolvency.
In fact, some Republican lawmakers have taken advantage of this impending issue as a reason to oppose a proposal to add dental, visual, and hearing coverage to Medicare. The provision is included in the Democrats’ $ 10 trillion $ 3.5 billion spending plan that would expand the social safety net and fight climate change, among other policy goals.
“Democrats are going through a new reckless expansion of Medicare, just as they are a few years away from bankruptcy,” R-Texas Rep. Kevin Brady said in a statement prepared at a session of the Media and Media Committee. of the House on Thursday, when the debate on parties began. of the massive legislative package of Democrats.
Due to the way Medicare is structured, adding dental, visual and hearing coverage would have little impact on the trust fund which is expected to be insolvent from 2026.
“In short, we’re talking a lot about different pots of money,” said David Lipschutz, associate director and senior policy advocate at the Center for Medicare Advocacy.
Medicare has about 62.8 million beneficiaries, most of whom are at least 65 or older. This is the age at which most Americans must enroll unless they meet an exclusion (such as having qualified health insurance elsewhere).
Basic Medicare consists of Part A (Hospital Insurance) and Part B (Outpatient Care Coverage). There is also Part D, which is prescription drug coverage. About 44% of beneficiaries choose to get these benefits through an Advantage Plan (Part C), an option offered by private insurance companies that may include limited dental, vision and hearing coverage.
In simple terms, it is the Part A trust fund that is facing a deficit from 2026, according to the latest report from the trustees. Unless Congress intervenes earlier, the fund could only pay approximately 91% of Part A claims from that year.
This trust fund derives most of its income from dedicated taxes paid by employees and employers.
In general, workers pay 1.45% through payroll tax withholdings (although an additional 0.9% is imposed on incomes over $ 200,000 for single taxpayers or $ 250,000 for couples married). Employers also contribute 1.45% on behalf of each worker. The self-employed basically pay both the employer’s and the employee’s fee.
Extending the benefits of Part B would have no direct impact on the solvency challenges facing the Part A Hospital Insurance Trust Fund.
Meanwhile, Part B, whose benefits would be extended, gets its funding from the monthly premiums paid by Medicare beneficiaries, as well as general government revenue. The same goes for Part D. And each year, premiums and revenue allocations are adjusted to reflect projected spending and to ensure that there is no deficit.
“Extending Part B benefits would have no direct impact on the solvency challenges facing the Part A Hospital Insurance Trust Fund,” said Tricia Neuman, executive director of the Medicare policy program. of the Kaiser Family Foundation.
However, he said, adding dental, vision and hearing would have an effect on overall Medicare spending. A 2019 Congressional report, based on a bill that would have added these benefits, estimated the cost to be $ 358 billion.
However, the Democrats’ current spending plan also includes the goal of allowing Medicare to negotiate with drug manufacturers, which is currently banned, as a potential way to help pay for extended benefits.
“Prescription drug savings would be used to offset these new costs … but there are many competing spending priorities for savings on the table,” Neuman said.
The massive legislative package of Democrats is in the early stages of debate. In addition to adding Medicare benefits, some Democrats want to include a lower eligibility age for Medicare (currently 65).
Other goals related to health care include expanding premiums for health insurance premiums through the public market of the Affordable Care Act (now in effect only in 2021 and 2022) and , in states that have not expanded Medicaid, provide coverage to eligible individuals. .
It is not yet clear whether the legislation that will be voted on will include everything that is being debated, or whether the current details of various provisions will eventually be amended. For extended Medicare benefits, the House measure would implement vision and hearing coverage in 2022 and 2023, respectively, while dental benefits would not begin until 2028.
“This is the closest thing we’ve come to since the beginning of the program to add these benefits,” said Lipschutz of the Center for Medicare Advocacy.
“There’s a feeling that if we don’t seize this opportunity, another one won’t come for a long time,” he said.
As for the insolvency issues with the Part A trust fund, there are several options that could help resolve the issue, Neuman said. For example, Medicare could reduce payments to providers (hospitals, nursing facilities, etc.) or Advantage plans. Alternatively, cost sharing for beneficiaries, ie deductibles or co-payments, could be increased.
Alternatively, additional sources of funding could be identified. This could include making sure certain taxpayers can’t dodge the Medicare employment tax, which has been proposed by Democrats as a way to increase revenue, or redirect other taxes to the trust fund.
“None of the policy options are politically attractive, but at some point Congress will have to address this issue to make sure that beneficiaries can get the benefits they are entitled to and the providers charge,” Neuman said.
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