Medicare Cuts May Hit American Middle Class, As Washington Debates Health Spending
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At the epicenter of budgetary politics in Washington, the major parties agree on few things -- save the imperative to raise Medicare premiums for wealthier retirees.
Following President Obama's $80.1 billion federal health spending proposal for fiscal year 2014, Congressional republicans maintained their support for a scheme to raise Medicare Part B premiums by splitting beneficiaries into five new tax brackets. Likely to become law with bipartisan support, the provision would gradually increase the ratio of beneficiaries paying higher premiums from 5 percent to as much as 25 percent.
Intended to stabilize the Medicare system for the long term, the proposal would raise the surcharge by hundreds of dollars each for the 20 million beneficiaries presently considered to be wealthy by government standards. Seniors would pay higher "income related" premiums for their outpatient care and also for prescription drug coverage.
The government presently defines wealthy as an annual income of $85,000 per year for individuals and $170,000 per year for couples.
However, some warn that cuts to government subsidies for the rich would trickle down to the middle class, as inflation meanders along. "Over time, the higher premiums will affect people who by today's standards are considred middle-income," said Tricia Neuman, Vice President for Medicare policy at the Kaiser Family Foundation. "At some point, it raises questions about whether [Medicare] premiums will continue to be affordable."
Others say the cuts unfairly punish those who saved prudently while others spent profiligately. Sheila Pugach, of Albuquerque, NM, for example, lives a middle class after saving for retirement during a career as a computer systems analyst, the AP reported. Given IRS rules for 401(k) retirement funds, Pugach must make minimum withdrawals that push her slightly over the cutoff.
"We were good soldiers when we were young," she said. "I was afraid of not having money for retirement and I put in as much as I could. The consequence is now I have to pay about $500 per year more in Medicare premiums."
Some analysts say Obama outflanked Congressional republicans -- at least on this budgetary issue -- by not only meeting republican spending cuts for Medicare but exceeding them. Rep. Paul Ryan, a republican from Wisconsin and former presidential candidate, said Friday he's "cautiously optimistic" about a bipartisan budget deal. Ryan had proposed Medicare spending of $6.74 trillion between fiscal years 2014 and 2023, with cuts of $200 billion to $380 billion to Medicare -- and Social Security. Obama saw that and "raised" him another $127 billion in cuts, for projected spending on Medicare during that time of $6.67 trillion.
Sen. Mitch McConnel, minority leader, kept his poker face however. "If the president believes these modest entitlement savings are needed to shore up these programs, there's no reason they should be held hostage for more tax hikes."