Why Medicare is suddenly under debate again
The White House released President Biden's $6.8 trillion proposed budget last week, listing his priorities for the upcoming fiscal year. Among other things, Biden singled out Medicare — the federal health insurance program for people aged 65 or older. Republican leaders insist they won't be threatening cuts to Medicare in upcoming budget negotiations, but others in the party have floated the idea of making changes over time to the program — including benefit cuts they say will be necessary to keep Medicare solvent.
NPR's Michel Martin, as co-host of All Things Considered, sat down this week with veteran health care journalist Julie Rovner, of Kaiser Health News, to get a better sense of where the debate is headed over how to fund Medicare, an expensive, but popular program. The following excerpt of their conversation has been edited for length and clarity.
MARTIN: So, what is the issue here?
ROVNER: Medicare's trustees say that within six years, the trust fund is going to run out of reserves, and so it won't be able to pay all of the current benefits. So basically, in order to bring down the cost, you have three options: You can make the people who are on the program pay more, you can make taxpayers who help support the program pay more, or you can pay health care providers — doctors and hospitals and all those folks — less.
Everybody considers any of those things, "cuts," although paying providers less is usually only considered a cut to the providers. If the cuts get too big, and the health care providers say "We'll walk away from the program," that's a problem too.
But Medicare is very popular, and I think in the State of the Union, when the president said he wasn't going to do anything to Medicare, people sort of slapped back and said, "But Medicare is going to go broke if we don't do anything." So in the budget, Biden said, well, here are a couple of things that we could do, none of which affect how much beneficiaries pay.
MARTIN: What are the top lines of what President Biden's proposing, in regards to Medicare?
ROVNER: It's actually fairly small. Last year, for the first time, Medicare was given legal permission to negotiate the price of drugs. There is a short list of drugs. This budget would make the list longer, and it would have those negotiations happen faster. It would also raise a tax on very high-income earners — those earning over $400,000. The Biden budget would raise that Medicare tax from 3.8% to 5% on those high earners.
MARTIN: Republicans have said that they can balance the budget over the next decade, but won't touch Medicare. Is that a credible stance?
ROVNER: It is, but only if they go after Medicaid — the actually larger public health insurance program for people with low incomes — and the subsidies on the Affordable Care Act, which the president has now also said he won't go after. It is possible to balance the budget without touching Medicare or Social Security or raising taxes, but you would have to cut so much from the rest of the budget. That's why we haven't seen a Republican plan yet. They're still trying to figure it out.
MARTIN: Senate Minority Leader Mitch McConnell has already said publicly that Biden's plan to increase the Medicare tax on high earners, "will not see the light of day." So what are we likely to see next?
ROVNER: Well, at some point, you know, the two parties are going to have to come together before the Medicare trust fund runs out of money. This is not the first time we've been within this close period where the trust fund could run out of money. It's happened several times in the past. Eventually, the parties do get together and figure out some way to shore it up. And I'm sure that will happen this time, too, but I suspect this year is going to be more of a fight leading up to the 2024 elections.
MARTIN: The talks over the debt ceiling are approaching. The leaders of both parties have said that Medicare is off the table. But is it conceivable that Medicare won't be implicated at some point in these talks?
ROVNER: No. Of course Medicare is going to be implicated at some point in these talks. First of all, what Republican leaders say is not necessarily what all of the Republican rank and file will do. That's true of the Democrats, too, so it's hard to imagine that Medicare won't be put on the table in some way, shape or form.
MARTIN: So, what will you be paying attention to as these discussions continue over the next couple of weeks and months?
ROVNER: Something needs to be done to Medicare, lest it run out of money. So I think that pretty much the entire federal panoply of health programs is going to be up for discussion — and that's what I'll be watching.
MARTIN: I'm just wondering, is this the kind of subject that the public really can focus on, can really get galvanized around?
ROVNER: It can and it can't. The trick is how this gets negotiated and how it gets presented to the public as to whether it will actually affect their health care.
Julie Rovner is the Washington correspondent for KHNand host of "What The Health?" — KHN's weekly health policy news podcast. After nearlyeight years of hosting Weekend All Things Considered, Michel Martin is taking on a new hosting role on NPR's Morning Edition.
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