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Medicare Is Already Means-Tested, Cont.

June 20, 2011 at 12:27 PM

Even Greg Mankiw apparently did not realize a point I made in a post last month:  “while Medicare coverage is nearly universal among people age 65 and older and all beneficiaries are eligible for the same services, high-income beneficiaries already pay much more for those benefits.”

Citing House Speaker John Boehner’s statement that we “consider means-testing Medicare,” Mankiw outlined the option of raising Medicare premiums for higher-income seniors.

But, as I explained, upper-income people already pay higher premiums for Medicare’s Supplementary Medical Insurance (or SMI, the part that pays doctor bills) and the Medicare prescription drug benefit than other beneficiaries do.  High-income taxpayers also pay more for Medicare’s Hospital Insurance (HI).

Policymakers may still want to raise Medicare premiums further for upper-income people to strengthen the program’s long-term finances.  But, in considering such a step, they need to understand that Medicare is already means-tested.