Income test for Medicare dental under debate, gets pushback

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For more than 55 years, Medicare has followed a simple policy: covered benefits are the same, no matter if you’re rich, poor, or in-between.

But as Democrats try to design a dental benefit for the program, one idea calls for limiting it based on income. The so-called “means test” is drawing internal opposition from many Democratic lawmakers, as well as advocacy groups for older people, like AARP.

Yet a senior Democratic congressional aide says an income limit is still in the mix as President Joe Biden tries to bring divided Democrats together on sweeping social and environmental legislation that would be their calling card in next year’s midterm elections. The aide spoke on condition of anonymity to address internal deliberations. The White House did not respond to requests for comment.

Another Medicare alternative would involve charging upper-middle-class and wealthy seniors higher premiums for the new dental plan, an approach that’s already applied to outpatient and prescription drug coverage and does not elicit such intense political opposition. It’s not clear if Democrats are looking at that as well.

Medicare is the government’s flagship health insurance program, covering more than 60 million seniors and disabled people. But it lacks dental, vision and hearing coverage, a gap that Vermont Independent Sen. Bernie Sanders has made it his mission to close. Committee-passed legislation in the House would incorporate the new benefits into the program.

But Biden and the Democrats are being criticized for spending too much money on their “Build Back Better” package, and particularly for providing child tax credits, educational and health benefits to people who could afford to pay their own way. The Medicare means test seems to have gotten its start with a set of policy talking points released earlier this year by centrist Sen. Joe Manchin, D-W.Va., representing his conditions for supporting the Biden legislation.

Under the heading “Families and Health,” Manchin wrote “needs based with means testing guardrails/formulas on new spending.” His office did not respond to requests for comment.

Meanwhile, progressive Sanders sees Medicare as the foundation for a future government health insurance program that would cover all Americans, regardless of age or income. His office had no comment on the income limitation controversy.

Means testing is getting some of its strongest support from the American Dental Association, which has called for a dental benefit that would cover seniors making up to three times the federal poverty line, or about $39,000, roughly half of Medicare recipients.

“We are not opposed to a Medicare dental benefit (but) we believe it should be focused on poor and low-income seniors,” said Michael Graham, the group’s top lobbyist.

Dentists are worried about Medicare setting fees for their services, as it now does with doctors. “Dentists need to be paid appropriately so they don’t lose money,” Graham said.

The dental association’s stance drew a rebuke from AARP.

“It troubles us that groups like the American Dental Association, who you would think would want to get people dental coverage, are offering alternatives that would deny millions of people coverage,” said David Certner, AARP’s policy director.

“Entering a means tested benefit into Medicare is a nonstarter for us,” added Certner.

Equally adamant is House Ways and Means Chairman Richard Neal, D-Mass., whose committee approved the Medicare benefits expansion. “I do not support any sort of Medicare means testing,” said Neal, one of House Speaker Nancy Pelosi’s top lieutenants.

Asked about means testing any expanded Medicare benefits, Senate health committee member Tina Smith, D-Minn., said: “Medicare is a fundamental benefit that everybody expects, and I think that that’s the way it should stay.”

Biden may have to take a public stand as Democrats try to close the deal. As a matter of general principle, the president doesn’t rule out income limits for certain government programs, says White House press secretary Jen Psaki.

“Means testing, I think, always has a bad connotation,” Psaki said earlier this week. “And what we’re really talking about here is a cap on income. So, we’re talking about targeting and focusing the president’s proposals, in some areas, on people who need help the most…and not providing this aid, assistance…to people who are in higher income brackets, who may not need that assistance.”

However, there’s no precedent within Medicare for an income-limited benefit, said health policy expert Larry Levitt of the Kaiser Family Foundation.

“The presumption has always been that having Medicare as a universal program creates political sustainability,” Levitt said. “As soon as you start limiting Medicare benefits to only lower income beneficiaries, it could lose some of its political support.”

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6 thoughts on “Income test for Medicare dental under debate, gets pushback

  1. As a Biden supporter in general, and fully believing seniors deserve the dignity of having the not-so-luxurious benefits of dental, vision, and hearing care, informed people have long known that means testing was coming for SS & MC. Even more so that they are considering adding new benefits (dental, visions, hearing) – it takes the wind out of the sails of the argument that “I’ve paid into this program, and I deserve all the benefits and shouldn’t be punished for earning a lot or having saved a lot.”

    It makes little difference if this is handled by rejecting coverage or charging higher premiums for those that can afford it. The only argument I’ve heard from my beloved Democrats is that it would cost a lot to implement such a plan. The devil is in the details: is it based on last year’s income or accumulated wealth. I’d advocate that either option should trigger the spoiler. Also, what level can we all agree on is “fair”. If one makes $500,000 of adjusted gross income (AGI), that’s easy. What about $100,000? That’s a lot to most people, but if you happen to be unfortunate enough to not have your home paid for, or live in a high cost of living state, or help out your struggling children, $100,000 doesn’t go as far as you might think.

    Basing it on wealth is much more attractive in the abstract. If you’re worth $3,000,000 and collecting SS, one could hardly make the case you can’t afford to pay for your own dental, vision, and hearing care. But in practice, it can be much harder to measure wealth since that data is not as readily available as your tax return. Sure, the value of your brokerage and IRA accounts are easy for the IRS to track, but what about the value of a closely-held non-publicly traded business. Or the equity in your home. I would not advocate forcing people in retirement to take out a mortgage or having to sell – unless there is an outsized pile of cash to be made. Again, difficult to draw the line.

  2. Means testing, higher age to attain full benefits, and the elimination of cost of living adjustments are the primary variables for bolstering Social Security Retirement and Medicare benefits. Our elected representatives need to act on these important issues before it becomes a crisis.

    1. Yes, to #1 and #2 – not sure I’d agree with $3. Although it would certainly have the effect of sustaining payments, it’s just not fair to eliminate COLAs especially since you are statistically likely to live another 20 years for men or 23 for women if age 62; 20 years for men or 23 for women if age 65; 18 and 18 if age 65; and 17 years for men or 19 for women if age 67. So, at a modest 3% rate of inflation, you lose about half your purchasing power after 10 years and nearly half after 20.

      Lifting the cap on earnings subjected to the SS tax is also a legitimate possibility, or at least increasing it by maybe double. The idea that you won’t get out of it what you’ve paid into it is a fiction long ago abandoned. It’s always been a tax that some people that result in some winners and some losers. Consider the significant number of people who die before or soon after retirement – oftentimes leaving behind no spouse of child beneficiaries to collect. Their entire contributions (and those of their employers’ matching), are lost – or more accurately, used to prop up the winners.

    2. Also worth pointing out that means testing for SS has effectively been in place for the last 37 years – that’s when a portion of your SS benefits first became taxable. The portion of your benefits subject to taxation varies with income level. You’ll be taxed on: up to 50 percent of your benefits if your income is $25,000 to $34,000 for an individual or $32,000 to $44,000 for a married couple filing jointly. and up to 85 percent of your benefits if your income is more than $34,000 (individual) or $44,000 (couple). Source AARP. Also, MC premiums are variable depending on income level.

  3. Payments for Medicare coverage are already somewhat based on income. One’s past year’s income as taken from tax documents is used to calculate the amount paid for Medicare, Part B.