THE Bush Administration is proposing a politically unpopular but fiscally responsible change to Medicare's prescription-drug benefit: means testing.
The proposal would raise fees for individual beneficiaries with incomes of about $80,000 or more, and couples who earn more than about $160,000. The higher fees would hit only about the wealthiest 5 percent of seniors enrolled in the drug program.
If enacted, this change would save the government at least $2 billion per year. By itself, that won't put much of a dent in the massive future deficits facing Medicare. But as more and more baby boomers become eligible for the prescription-drug benefit, this step represents the kind of cost containment that needs to be undertaken.
There is already a precedent in Medicare for making affluent seniors - who benefited the most from President Bush's tax cuts - pay a higher share of the cost. Currently the government imposes means testing on Medicare Part B, which covers physician visits and outpatient hospital care for about 40 million people who are 65 and older, or disabled. Couples whose income exceeds $164,000 pay higher premiums on a sliding scale. The income limit increases annually with inflation.
Politically, the proposal faces an uphill battle. The President's popularity is low, and powerful senior advocacy groups like AARP can be counted on to fight it. AARP's endorsement of the 2003 prescription-drug law was crucial to its passage, and the group probably would not have supported the measure at the time if means testing had been included.
None of that means the change isn't fiscally sensible. It would apply to the senior citizens who can afford it the most. The government ought to employ means testing of Social Security benefits too, as the bulging baby boom generation begins to rely on the program, straining its resources.
If the government is going to ask some beneficiaries to pay more, however, it also needs to do a better job making sure all Medicare beneficiaries are being treated fairly by private insurers. A report by the New York Times showed that tens of thousands of Medicare recipients have been victims of deceptive sales tactics and were improperly denied claims by private insurers that run the prescription-drug program. The fines imposed by the government so far on 11 companies are too puny to stop these violations. Beneficiaries need to know the program is looking out for their interests.
Some Medicare experts worry that affluent seniors, who can more easily afford private health plans, will be driven out of Medicare if premiums and fees become too high. That could turn Medicare into a welfare program for the sickest seniors, making it more vulnerable to political attack.
The proposed increases in drug fees thus need to be modest enough that they won't lead wealthy seniors to abandon Medicare. But the concept of means testing is fair.
The benefit approved by Congress four years ago is enormously costly to taxpayers, and it doesn't shock the senses to ask the most affluent beneficiaries to pay a little more.