Biden wants to raise taxes to expand Medicare funding

President Joe Biden proposed new taxes on the rich on March 7 to help fund Medicare. He said the plan would help extend the coverage of the insurance program by 25 years and bring some middle-class stability to millions of older people. APNews.

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In his plan, Biden openly states that the rich should bear the heavier tax burden. His budget will draw a direct link between these new taxes and the popular health insurance program for people over 65. In effect, he is asking those who have done well in the economy to subsidize the rest of the population.

Biden wants to increase the Medicare tax rate from 3,8% to 5% on income in excess of $400 a year, including wages and capital gains. The White House did not provide specific estimates, but the move is likely to increase tax revenue by more than $000 billion over 117 years, according to preliminary estimates by the Tax Policy Center in February.

“This modest increase in Medicare contributions from those with the highest incomes will help keep Medicare strong for decades to come,” Biden wrote in a March 7 essay in The New York Times. He called Medicare "the safest guarantee that Americans count on when they retire."

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Senate Minority Leader Mitch McConnell, D-Kentucky, quickly dismissed the plan, telling reporters that Biden's budget agenda was not viable.

More than 65 million people rely on Medicare, costing taxpayers about $900 billion a year. Medicare enrollment is expected to continue to grow as the US population ages. But funding the program is a challenge, as federal officials warn that without tax cuts or increases, Medicare will only be able to pay 90% of benefits by 2028.

Biden's proposed Medicare changes are part of a more comprehensive budget proposal he plans to release on March 9 in Philadelphia. Getting the proposal through Congress is likely to be difficult as Republicans control the House of Representatives and Democrats have a slim majority in the Senate.

The proposal is a direct challenge to GOP lawmakers who argue that economic growth comes at the expense of tax cuts. Such events were held by Donald Trump in 2017. These cuts disproportionately favored wealthier households and companies. They contributed to widening budget deficits when economic growth failed and the economy was derailed in 2020 by the coronavirus pandemic.

Conflicting views about how taxes will affect the economy are part of a broader opposition. Biden and Congress need to reach an agreement to increase the government's borrowing power at some point this summer or the government could default and plunge the US into a debilitating recession.

Grover Norquist, president of Americans for Tax Reform and a supporter of the kinds of tax cuts that Republicans typically support, said the US economy would be hurt by the president's plan.

"Biden's tax hikes will raise the cost of goods and services for everyone and make American workers and businesses less competitive internationally and relative to China," Norquist said.

But Maya McGuineas, president of the Committee for a Responsible Federal Budget, welcomed the plan despite some reservations about it.

"The president's plan will bring in hundreds of billions of dollars -- perhaps even close to a trillion dollars -- to strengthen Medicare," said McGuineas, a financial watchdog focused on reducing the deficit.

White House press secretary Karine Jean-Pierre declined to discuss the numbers behind the budget plan. At a briefing on March 7, she told reporters that she would not "dive into the math" as Biden's proposal on March 9 "would be very detailed and transparent."

The independent, impartial Congressional Budget Office will review the proposal later this year.

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William Arnone, executive director of the National Academy of Social Insurance, says there is some risk in taxing wealthier Americans under the program, given that they are already paying more Medicare premiums.

“At some point, higher-income Medicare beneficiaries may say, ‘This is no longer profitable for me,’” Arnone said. “The genius of Social Security is that we all pay and we all get something in return.” If people with higher incomes begin to question the fairness of the program, it could lead to a loss of confidence in the program.” His group is an advocacy organization for Medicare and other social programs.

Ahead of expected budget wrangling and the 2024 campaign season, Democrats have stepped up Medicare talk, vowing to fend off any Republican attempts to cut the program, though so far the GOP has vowed to avoid any cuts. However, Republican lawmakers have not agreed on how to deliver on their promise to put the government on the path to a balanced federal budget over the next 10 years.

Last year, members of the House Republican Research Committee proposed raising the Medicare eligibility age to 67, which is in line with Social Security. But that idea didn't move forward in a divided Congress.

Republicans deny they plan to cut the program. A proposal by Senator Rick Scott, D-Fla., requiring Congress to review all federal laws every five years, including Medicare, failed to gain support.

Raising taxes for Americans who earn more than $250 to pay for Medicare has broad support among older Americans, but raising the age for Medicare eligibility is anything but popular, said Mary Johnson, a political analyst with the non-partisan Senior Citizens League who researched the issue. .

“Politicians who try to go down this route may lose supporters, and this may backfire. You could also lose voters,” she said. “A very high percentage of older people vote in elections.”

Biden's plan also aims to close what the White House calls loopholes that allow people to avoid Medicare taxes on some incomes. Beyond taxes, Biden wants to expand Medicare's ability to negotiate drug costs, which began with the Inflation Reduction Act. He signed a massive bill last year.

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The White House said its budget plan would expand the pharmaceutical drug provisions of the Inflation Reduction Act. More medicines will be subject to price negotiations, other medicines will be included in the negotiation process earlier, and the volume of discounts will be expanded.

Collectively, Biden's new proposals will help bolster the key trust fund that funds Medicare. These changes will keep the fund solvent until the 2050s, about 25 years longer than currently expected, according to the White House.

Changes will also be made to Medicare benefits. Biden wants to limit the cost-sharing of some generic drugs to $2. The idea will reduce the out-of-pocket costs of treating hypertension, high cholesterol and other diseases.

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