Obama Publicly Backs Means-Testing Medicare (UPDATE)

Obama Publicly Backs Means-Testing Medicare

WASHINGTON -- President Barack Obama formally acknowledged on Friday that he would support a plan to means-test Medicare as a part of a deal to raise the nation’s debt ceiling.

“I have said that means-testing on Medicare, meaning people like myself -- I’m going to be turning 50 in a week, so I’m starting to think a little bit more about Medicare eligibility -- but you can envision a situation for somebody in my position, me having to pay a little bit more on premiums or co-pays would be appropriate. And again, that would make a difference,” the president said at a press conference. “What we are not willing to do is restructure the program in the ways we have seen coming out of the House in recent months.”

The comment was the first public acknowledgment from the White House that the president would support changing the payment structure of the entitlement program. Prior to Obama’s remarks, multiple sources in both parties told The Huffington Post that the administration was making it clear to debt ceiling negotiators that such a structural change to Medicare was on the table.

The proposal is not entirely controversial among health care economists. But it will rankle a good chunk of the president's own party, which has sought to keep Medicare's structure as a basic insurance program. Medicare premiums for doctors and for prescription drugs are already means tested. Making top earners pay even more -- while potentially sound policy -- opens the program to the politically potent charge that it is becoming health care welfare for lower income Americans.

The Obama administration's embrace of the idea came during talks between lawmakers and Vice President Joseph Biden. The exact contours of what was proposed are not entirely clear. But a version that House Majority Leader Eric Cantor (R-Va.) proposed in later discussions would have saved the government an estimated $38 billion by charging those high-income beneficiaries 10 percent more for the cost of hospital stays and prescription drugs.

Obama's nominal support for means-testing Medicare, however, does fit into the larger outlines of his plan for the debt ceiling debate. In an effort to both win the support of Republicans and tackle as many deficit-contributing issues as possible, the administration has placed entitlement programs like Social Security and Medicare ("sacred cows" for the Democratic Party) squarely on the table. The president also lent his support to a plan to raise the eligibility age of Medicare from 65 to 67, over the course of roughly 25 years. His team has, additionally, discussed various changes to the way in which Social Security benefits are measured and paid.

Both of those ideas encountered immediate push back within Democratic and even moderate Republican circles. Means-testing Medicare has more political support. Rep. James Clyburn (D-S.C.) a top-ranking Democrat in the caucus, has embraced the idea, as have the party's more fiscally conservative members. In the past, the administration too has embraced the idea. The president's own health care law placed a small tax increase on the wealthiest Americans, a fee that could, theoretically, be considered a form of means-testing. And in his 2009 budget, the Obama administration suggested means-testing the prescription drug portion of Medicare.

A request for comment for this article was not immediately returned by an administration aide.

UPDATE : 1:30 p.m. -- An administration official sent HuffPost the following statement in order to point out that President Obama was not advocating lowering the income threshold at which Medicare beneficiaries would be asked to pay higher premiums.

Currently, Medicare premiums for doctors and for prescription drugs are already means tested, meaning that couples making over $170,000 or singles over $85,000 (about 5% of Medicare beneficiaries) already pay somewhat higher Medicare premiums.

What the President referenced today was his openness, as part of a potential big deal, to asking Medicare recipients over those high-income thresholds to pay modestly higher premiums. At no point did the Administration express openness to raising premiums on Medicare beneficiaries below those income levels.

(Note that the Affordable Care Act already included a nominal freeze of those high income thresholds through 2019, resulting in modestly greater means-testing for high income Medicare beneficiaries).

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