Biden Budget Will Propose Tax Increase to Bolster Medicare

Biden Budget Will Propose Tax Increase to Bolster Medicare

President Biden, as part of his budget set for release on Thursday, will propose raising a tax on Americans earning more than $400,000 as part of a series of efforts to extend the solvency of Medicare by a quarter-century.

The president will also propose expanding that tax, which helps fund health care programs, to cover a wider swath of income, including some earnings by business owners that currently are not subject to it, White House officials said in a fact sheet released on Tuesday morning. Mr. Biden will also seek to broaden a measure, passed last year entirely with Democratic votes, that allows Medicare to negotiate the price of certain prescription drugs with pharmaceutical companies, which is projected to save the government money.

His plans are unlikely to become law. They are almost certain to be rejected by Republicans, who won control of the House in November and roundly oppose tax increases.

But in focusing on Medicare in the budget and before its release, Mr. Biden is seeking to sharpen a contrast with Republicans and cast himself as a protector of cherished retirement programs — both for his likely re-election campaign and for a looming congressional battle over raising the nation’s borrowing limit that centers on taxes, spending and debt.

“The budget I am releasing this week will make the Medicare trust fund solvent beyond 2050 without cutting a penny in benefits,” Mr. Biden wrote in an opinion piece for The New York Times on Tuesday. “In fact, we can get better value, making sure Americans receive better care for the money they pay into Medicare.”

For the first time this year, Medicare will begin regulating the price of prescription drugs, using new powers Congress gave it in the Inflation Reduction Act, the tax, health and climate bill Mr. Biden signed late last summer. The president’s budget highlights the substantial savings that the reforms are expected to generate over time.

The legislation allows Medicare to regulate the price of certain expensive drugs that have been on the market for several years. It also limits the amount all drug makers can raise prices each year. Those reforms will save Medicare about 160 billion over a decade, according to the Congressional Budget Office.

The changes to prescription drug prices accompanied changes to Medicare’s benefit that will also lower the costs of expensive drugs for its beneficiaries, by capping the total amount they can be asked to pay in a year for all their medicines and by limiting co-payments on insulin to $35 a month.

Mr. Biden will propose expanding the drug negotiations by allowing the government to negotiate over a broader universe of medication. The White House estimates that those changes and other tweaks to the drug negotiation provision will save the government an additional $200 billion over 10 years, which it seeks to direct to the Medicare trust fund. Medicare’s trustees estimate its hospital trust fund will be insolvent by 2028 without congressional action.

Republicans are unlikely to go along. They have tried to overturn the entire Inflation Reduction Act, including the drug negotiations, which some members of the party say will hamper innovation in the pharmaceutical industry. They have also sought to roll back Mr. Biden’s tax increases on corporations and high earners.

The president’s Medicare plan includes another increase, raising a Medicare-linked tax on people earning above $400,000 annually to 5 percent from 3.8 percent and broadening the income subject to that tax.

But Mr. Biden did not propose other major new policies to reduce Medicare’s spending on health care in the coming years. His proposal, like his previous budgets, omits a series of policies meant to reduce waste that were featured in budgets offered by President Barack Obama and President Donald J. Trump.


Source Link