March 7 (Reuters) – U.S. President Joe Biden will seek to raise the Medicare tax on high earners and push for more drug price negotiations to help keep the federal health insurance program solvent through at least 2050 as part of his budget proposal this week, the White House said.
The tax increase from 3.8 percent to 5 percent on earned and unearned income above $400,000 is part of a package of proposals aimed at extending the solvency of Medicare’s Hospital Insurance (HI) Trust Fund by at least 25 years, the White House said in a statement on Tuesday.
“Let’s ask the wealthiest to pay just a little bit more of their fair share, to strengthen Medicare for everyone over the long term,” Biden wrote separately in a New York Times guest essay.
Biden has sought to link Republicans to the idea of cutting funding for the insurance program for seniors and the disabled as part of negotiations over increasing the United States’ $31.4 trillion debt limit. The Democratic president has pledged to offer his vision for funding Medicare and challenged Republicans to offer their own.
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The president is scheduled to unveil his budget on Thursday, including a speech in Philadelphia to highlight his plan, although it faces likely opposition from Republicans who control the House.
Biden called the rate increase “modest,” adding in the Times: “When Medicare was passed, the wealthiest 1 percent of Americans didn’t have more than five times the wealth of the bottom 50 percent combined, and it only makes sense that some adjustments be made to reflect that reality today.”
His proposal also seeks to close loopholes that allow high earners to shield some of their income from the tax, the White House said.
The Inflation Reduction Act (IRA), passed by Democrats last year, authorizes Medicare to negotiate prices for high-cost drugs. The budget proposal would allow Medicare to negotiate prices for more drugs and to do so sooner after they launch, saving $200 billion over 10 years, the White House said.
Without any action, the most recent Medicare Trustees Report projected that the trust fund would be insolvent in 2028.
Some House Republicans have said Medicare along with Social Security, which delivers retirement and disability payments, should be part of any budget negotiations. While popular, the two programs account for about one-third of federal spending, according to the Congressional Budget Office, and are expected to grow as the U.S. population ages.
(This story has been refiled to add the dropped word ‘on’ in the headline)
Reporting By Jarrett Renshaw
Editing by Shri Navaratnam and Chizu Nomiyama
Our Standards: The Thomson Reuters Trust Principles.
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