In one of the few specifics he gave in this morning's press conference, President Obama endorsed the idea of means-testing Medicare. In a column yesterday, I floated the idea as a possible compromise position, because it allows Republicans to say that they cut entitlement spending without raising taxes, and enables Democrats to say they asked more of the wealthy.
It's worth emphasizing that Democrats already voted for means-testing as part of the health care law and Republicans did as part of their vote for Rep. Paul Ryan's budget.
More specifically, Medicare already charges higher premiums to to wealthier beneficiaries, and the health care law froze the income level thresholds so that as incomes naturally grow over the next decade, more Medicare beneficiaries will be pushed into the higher income levels. Also, the law hiked prescription drug premiums on higher-income earners.
The Ryan plan also includes an element of means-testing, because those with higher incomes will receive a lower level of premium subsidies.
Earlier this week, I caught up with Richard Foster, the chief acutary for the Centers for Medicare and Medicaid Services, and asked him about the options for means-testing. He noted that there's already "quite a bit" of means-testing in the program, and whether to expand it was a policy decision, which he steers clear of. But he did explain that further changes to the premium levels would be a lot easier to implement than other ideas that have been proposed, such as altering deductibles or co-payments.
"In practice, administering an income-related benefit package where your deductible might change, or your cost-sharing might change, depending on your income level -- that gets to be pretty messy," Foster told me. "Because all that happens at the local doctor's office, or at the hospital. And then you have to know not just what insurance coverage you have, but what income category you fall into, and that's not straightforward. Policymakers could if they wanted to change the basis for income-related premiums."
As I wrote in my column, there are also options for means-testing Social Security, though Obama didn't mention that as a possible option in his comments this morning.
