Democrats Rather Politics Than Soak Rich, For Now!

Even more than Democrats like the idea of soaking the rich, they like to politic. Even in the face of the soon impending bankruptcy of Medicare and explosion of the federal budget. And, more politics now by the Democrats means even more taxes, or more drastic restrictions on benefits, later, which will impact all including the less affluent.

President Bush, as required by Congress, proposed a premium increase last February for Medicare Part D prescription drug coverage, due to the impending budget-busting bankruptcy of Medicare. Of the president’s proposal, according to the New York Times, “The Democratic-controlled Congress is unlikely to approve Mr. Bush’s legislation.” The president’s proposal:

As for the prescription drug proposal, it would create an income-linked system of premiums similar to the one already in effect in Medicare Part B, which covers doctor visits and outpatient services. Prescription drug premiums would increase for any individual with income over $82,000 and any couple with income exceeding $164,000. Premiums would more than triple for many individuals with incomes over $205,000 and for many couples with incomes over $410,000….

Initially, fewer than 5 percent of people with Medicare drug coverage would have to pay the higher premiums. But this proportion would grow because the income thresholds would remain the same, with no allowance for inflation….

John McCain also proposes that those with higher incomes in retirement should pay more for their Medicare Part D prescription drug coverage. And, Democrats continue their opposition, preferring to wedge for the 2008 elections rather than responsibly hedge the impending Medicare funding disaster. As today’s New York Sun reports,

But Democrats aren't biting, and instead they plan to argue that Mr. McCain's call for wealthier Americans to pay higher drug premiums undercuts his chief criticism of his possible opponents this fall: their support for higher taxes on people in the top income brackets.

The overall cash-flow of Medicare starts running in the red in the next decade. To slightly delay that day, starting in 2007 the premiums are higher for Part B (physician) coverage by those retirees with incomes above $80,000 for singles, $160,000 for married – mostly derived from the lifetime responsibility of savings. In 2008, the premium is 27% higher up to $102,000/$204,000; 67% higher up to $153,000/$306,000; 107% higher up to $205,000/$410,000; 147% higher above that. The increase in premium for Part D coverage is parallel.

The March 2008 Medicare Trustees’ report says the Part A, hospitalization, benefits already exceed the payroll tax income by $342-billion. The Trustees say,

These projections demonstrate the need for timely and effective action to address Medicare’s financial challenges. Consideration of such reforms should occur in the relatively near future. The sooner the solutions are enacted, the more flexible and gradual they can be.