Cost-Saving Alternatives Include:
The government pays a lot for people at all income levels. Medicare Part B (doctors) and Part D (drugs), are not paid by the payroll tax, and are paid by premiums and government aid. (Part A, hospitals, is paid by the payroll tax.) Currently the Part B premium is $105 per month per person, and the cost is 4 times as much, $420 per month, so taxpayers pay a 75% subsidy. Premiums go up with income and subsidy is reduced, in several bands of income, but even the highest income participants get 20% subsidy.
The current premium is about 2% of income (red line above). It is
The Bipartisan Policy Center recommends starting bands at lower incomes (p.59 of full report), which result in higher premiums (and lower subsidies - green dashes above):
Kaiser summarizes a variety of 2014 Budget proposals involving 15% increases in the premiums paid by high income participants, starting the first band lower, and slowly lowering all bands by not adjusting for inflation for several years (red dots above). Premiums would be:
A Tucson blogger recommends charging 5% of income, up to the full cost (purple line above). Dots show bands of income, where people pay
This option charges low income people the current $105, since Medicaid already pays the premium for most of them. Dropping the premium to 5% for low income people would cost Medicare more, but save an equivalent amount in Medicaid assistance, so the $19 billion overall savings would remain. It is far more than the $1.5 billion saved by the readmission penalty. Incomes can be adjusted for cost of living (purchasing power parity) by using US government locality pay. AARP presents arguments for and against basing premiums on income.
In the spreadsheet you can try different percentages and bands. A 3% charge could have bands of income where people pay
The graphs show subsidies people would receive from various proposals. The current Medicare subsidy is large, even at incomes well over $100,000. The government does not subsidize food or housing for people at those incomes. The highest income limit on Food Stamps is $15,000 for one person, $20,000 for two; in subsidized housing it is $55,000 for one, $63,000 for two (Honolulu). Housing tax benefits do go to higher incomes, but people still have to pay the basic cost themselves. Why does the government make such large direct payments for health insurance for people with incomes over $100,000?
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