Democrats want GOP to show hand on Medicare in deficit negotiations

Democrats wary of accepting any entitlement benefits cuts are asking Republicans to show them their plans if they want to make Medicare means-testing a part of a lame-duck fiscal package.

GOP leaders have floated the idea of hiking Medicare costs for wealthier beneficiaries – a proposal President Obama has repeatedly backed – as a condition of any deal to prevent a slew of tax hikes and spending cuts from taking hold Jan. 1.

{mosads}But Speaker John Boehner (R-Ohio), the GOP’s point man in the negotiations, has declined to specify the Republicans’ wish-list for entitlement reform – at least publicly. And it’s unclear whether means-testing would be enough to win GOP support for a deal that would also hike tax rates on households with annual family income above $250,000.

“If that is what the Republicans want to propose, then they ought to propose it, not just have it float,” Democratic Whip Steny Hoyer (Md.) said this week, referring to GOP calls to increase Medicare means-testing, raise the program’s eligibility age and cut cost-of-living increases to Social Security payments.

“As you know, [Democrats] are not proposing those three.”

Rep. Sandy Levin (Mich.), the senior Democrat on the Ways and Means Committee, which has jurisdiction over Medicare policy, echoed that message. Noting that certain Medicare payments are already means-tested, he urged GOP leaders to define what additional costs, if any, they want to wealthier beneficiaries to pay.

“We’re already doing income-related [rates], and they should tell us what more they want,” Levin said Thursday. “Maybe the Speaker’s telling that to the president [but] they just keep on saying they want more from Democrats without saying what they want [themselves].”

Rep. Mike Honda (D-Calif.) also suggested he won’t accept any reductions in Medicare benefits. But he didn’t close the door on expanded means-testing.

“I want to look at it and think about it,” Honda said Thursday.

Obama and Boehner spoke on at least three separate occasions this week to try to break the stalemate over how to prevent hundreds of billions of dollars in tax hikes and spending cuts from going into effect next month.

Obama’s proposal – which would have hiked costs under Medicare Part B and Part D for higher-income seniors starting in 2017 — would raise roughly $30 billion, according to the Congressional Budget Office.

Republicans have conceded that the elections have given Obama leverage on one of the Democrats’ top priorities – an increase in tax rates on the highest earners – but they also want to exact major cuts to entitlement spending in return.

Senate Minority Leader Mitch McConnell (R-Ky.) said last month that, if Republicans are going to support higher taxes as part of a fiscal-cliff deal, Democrats should be prepared to concede major entitlement cuts – changes like Medicare means testing and a hike in the eligibility age.

“Those are the kinds of things that would get Republicans interested in new revenue,”
McConnell told the Wall Street Journal last month.

Obama is already on the record supporting an expansion of Medicare means testing. Indeed, his most recent budget proposal would save $28 billion over a decade by hiking costs on physician and prescription-drug coverage for the highest-income seniors. The president also backed a similar plan as part of his (failed) negotiations with Boehner over a budget grand bargain in the summer of 2011.

“You can envision a situation where, for somebody in my position, having to pay a little bit more on premiums or co-pays or things like that would be appropriate,” Obama said in July 2011.

{mossecondads}That idea was once anathema to Democrats, with the late Sen. Teddy Kennedy (D-Mass.) leading the charge to keep Medicare an equal-cost program for all beneficiaries. Backed by AARP, such advocates argue that higher Medicare costs could push wealthier beneficiaries into private insurance plans, thereby making the patient pool poorer, sicker and lacking the political clout needed to keep the program viable in the future.

Still, a number of Democrats are coming around this month to embrace the change. Sens. Dick Durbin (D-Ill.), Max Baucus (D-Mont.) and Claire McCaskill (D-Mo.) have all expressed a recent openness to expand means testing for the sake of deficit reduction.

And in the lower chamber, Rep. Emanuel Cleaver (D-Mo.), the chairman of the Congressional Black Caucus, sounded a similar note this month.

“I think most rational people, including Democrats, agree we have to make some cuts and deal with Medicare,” Cleaver said Dec. 7 on MSNBC. “Let’s have some means-testing, because I don’t think that cutting benefits at this time is going to go over well. We can do means-testing and reduce the payments [to the wealthy].”

Cleaver on Thursday emphasized that he’s “not excited” about hiking Medicare rates on anybody, but said he could support such a plan – “not joyfully” – if it meant preserving benefits for lower-income seniors.

“It’s revolutionary to have Democrats even talk about means testing,” he said.

Not everyone in Cleaver’s caucus is so willing to do so. Many liberal Democrats oppose Medicare means testing as part of a fiscal-cliff deal, arguing that the change would shift costs to vulnerable seniors.

Reps. Raul Grijalva (D-Ariz.) and Keith Ellison (D-Minn.), who head the Congressional Progressive Caucus, issued a joint statement this week warning that expanded means testing would increase costs on all seniors, “including thousands in new hospital deductibles.”

Rep. Jan Schakowsky (D-Ill.) warned that hiking rates on the top 25 percent of Medicare earners – as some have proposed – would affect beneficiaries making as little as $47,000 per year.

“That’s because seniors are poor,” she said Thursday. “Their median income is $22,000 a year.”

House Minority Leader Nancy Pelosi could also prove an obstacle to new means testing in a fiscal-cliff bill. On Thursday, the California Democrat argued that entitlement reform should not be a part of the lame-duck negotiations. She’s calling instead for Congress to tackle those issues next year as part of a broader tax-and-spending package.

“That should be left to next year,” she said. “That’s a longer conversation about where we go [on entitlements].”