Biden seeks to extend solvency of Medicare to 2050s

The Biden administration recently released its proposed 2024 federal budget, which would extend the solvency of Medicare by 25 years while reducing behavioral health and medication costs for beneficiaries.

According to a White House press release, the extension would increase the Medicare tax rate on those with earned and unearned incomes above $400,000 from 3.8% to 5%, close loopholes within current Medicare taxes and “dedicate the revenue from the net investment income tax to the Medicare’s Hospital Insurance Trust Fund.”

Additionally, the Biden administration said that the budget would allow Medicare to negotiate prices of more prescription drugs and bring drugs into negotiation sooner, building on the Inflation Reduction Act (IRA).

“It also strengthens the IRA requirement that drug companies pay rebates to Medicare when they increase prices faster than inflation by extending this rule to commercial health insurance,” the release said.

Medicare beneficiaries would see cut costs in several areas. The administration proposed to:

• lower out-of-pocket costs for high-cost drugs that are subject to negotiation;
• cap Part D cost-sharing for certain generic drugs, including those for chronic conditions like hypertension, to $2 per prescription each month; and
• eliminate cost-sharing for three mental health or other behavioral health care visits for beneficiaries each year and require “parity between physical health and mental health coverage in Medicare.”

The proposed budget would also remove “unnecessary” limitations that hinder beneficiaries’ access to psychiatric hospitals, the release said.

In a statement, ACP President Ryan D. Mire, MD, applauded the proposal for recognizing “the critical role that the Medicare program plays in keeping Americans healthy.”

“We agree with the president that keeping the Medicare program solvent is of utmost importance, and that it is important that we do so while ensuring that services for beneficiaries are not eliminated,” he said. “Lowering the cost for prescription drugs and for behavioral health services will help my patients access the care they need. A healthy Medicare program is key to our country’s health care future.”

References:

• Fact sheet: The President’s budget: Extending Medicare solvency by 25 years or more, strengthening Medicare, and lowering health care costs. https://www.whitehouse.gov/briefing-room/statements-releases/2023/03/07/fact-sheet-the-presidents-budget-extending-medicare-solvency-by-25-years-or-more-strengthening-medicare-and-lowering-health-care-costs/. Published March 7, 2023. Accessed March 8, 2023.
• Internal medicine physicians say President’s budget recognizes importance of Medicare. https://www.acponline.org/acp-newsroom/internal-medicine-physicians-say-presidents-budget-recognizes-importance-of-medicare. Published March 8, 2023. Accessed March 8, 2023.