Automatic 2% Medicare cuts begin

Wealthy seniors should pay more in Medicare premiums, according to a brief from the conservative Heritage Foundation.

The question in Medicare’s financing problem is, “Who should receive a subsidy, and how much should they get?” wrote senior economics fellow J.D. Foster, Ph.D.

Taxpayers spend an extra $4,897 per Medicare beneficiary above what is collected in taxes and premiums, he says. Medicare beneficiaries who are single, with modified gross income under $85,000, pay a basic premium for Part B of $99.90 per month.That increases gradually, so that when married couples have a combined income of $428,000, the premium tops out at $319.70. That still leaves a 20% subsidy, he wrote.

“Eliminate the subsidy entirely, and Medicare’s shortfall disappears now and forever. The subsidy IS the shortfall,” Foster wrote. Rather than raise payroll taxes or reduce payments to healthcare providers, a bipartisan solution is to have those in the upper income brackets paying more. While President Obama has endorsed the idea in his 2013 budget, some say they worry that it would force wealthier seniors to stick with private insurance.

Medicare does not cover extended long-term care “custodial” stays, but Part A pays for inpatient care in hospitals or a skilled nursing facility, as well as hospice and home health services.