President Joe Biden announced potential changes to Medicare on Tuesday as he prepares to present the fiscal year 2024 budget.
Among the changes, President Biden is proposing to increase the Medicare tax rate from 3.8% to 5% for those earning $400,000 a year or more. The president says he would also close a loophole regarding how those with higher incomes can report Medicare taxes. The budget proposal would also expand how Medicare negotiates prices for more drugs and bring drugs into negotiation sooner after they launch.
Citing a Medicare Trustees Report, President Biden said the changes would extend the solvency of Medicare from 2028 through the 2050s.
He defended the plan in an op-ed Tuesday in the New York Times.
“Only in Washington can people claim that they are saving something by destroying it,” President Biden said. “The budget I am releasing this week will make the Medicare trust fund solvent beyond 2050 without cutting a penny in benefits. In fact, we can get better value, making sure Americans receive better care for the money they pay into Medicare.”
Although President Biden repeated claims that Republicans are vowing to cut Medicare, House Speaker Kevin McCarthy has said cuts to Medicare and Social Security are not on the table.
For most Americans, a 2.9% Medicare tax on wages is evenly split between the employer and employee. If that person is self-employed, they are responsible for the entire tax.
Employers are responsible for paying an additional .9% in Medicare tax for wages paid in excess of $200,000 per year.