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Medicare means test: good fiscal policy or just plain mean?

President Barack Obama will turn 50 on August 4, 2011. Is his job cutting his life shorter?
President Barack Obama will turn 50 on August 4, 2011. Is his job cutting his life shorter?
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Lawmakers are dueling over the debt ceiling and it looks like any deal they strike will be contingent on big budget cuts. Over the past couple of months President Barack Obama and congressional leaders have been echoing the same phrase when it comes to cuts: “everything is on the table.” That means budget items that used to be off limits like defense spending and entitlements are suddenly up for debate. One of the ideas being kicked around is a means – or wealth – test for Medicare. In other words, charging wealthier Medicare recipients more for their medical coverage. In 2007 congress enacted something of a means test, sharply increasing the premiums of people who make over $200,000 a year. Now some people apparently want to expand that. Even President Obama indicated he would support a means test saying it would be appropriate and could save trillions of dollars. The savings are undeniable, but the appropriateness is up for debate. Seniors groups are insisting that Medicare is not welfare, seniors have paid in all their lives and deserve to get out what they put in. Meanwhile lawmakers and some economists insist that we all have to tighten our belts and since Medicare costs are a huge driver of our national debt they must be brought under control. But, is a means test the only way to do that? What other options are out there to curb costs? And how much responsibility should older, wealthier Medicare recipients shoulder for their healthcare costs?


Mark V. Pauly, Professor of Health Care Management, University of Pennsylvania’s Wharton School; Author, Markets Without Magic: How Markets Can Reform Medicare

Ernie Powell, State Advocacy Director for California, American Association of Retired People (AARP)