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It’s a situation that seems inappropriate: Democrats in Congress want to expand Medicare’s benefits while a trust fund that supports the program faces bankruptcy.

In fact, some Republican lawmakers have taken this looming issue as a reason to reject a proposal to add dental, eye and hearing protection to Medicare. The provision is included in the Democrats’ $ 3.5 trillion 10-year spending plan, which aims to expand the social safety net and combat climate change, along with other policy goals.

“Democrats are ramming through a ruthless new expansion of Medicare – just as it is a few years before bankruptcy,” Rep. Kevin Brady, R-Texas, said in prepared remarks at a House Ways and Means Committee meeting Thursday when the Debate began on the parts of the Democrats’ massive legislative package.

Due to the structure of Medicare, adding dental, eye and hearing protection would have little impact on the trust fund, which is expected to be insolvent by 2026.

“In short, we’re mostly talking about different pots of money,” said David Lipschutz, associate director and senior attorney for the Center for Medicare Advocacy.

Medicare has approximately 62.8 million beneficiaries, most of whom are at least 65 years of age or older. This is the age at which most Americans are required to enroll unless they meet an exclusion (e.g., qualifying health insurance elsewhere).

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Basic Medicare consists of Part A (hospital insurance) and Part B (outpatient long-term care insurance). There is also Part D, which includes prescription drug coverage. Approximately 44% of beneficiaries choose to receive these benefits through an Advantage Plan (Part C), an option offered by private insurance companies that may include limited coverage for dental, visual and hearing aids.

Put simply, it’s the Part-A Trust Fund that is facing a deficit from 2026, according to the latest Trustees Report. If Congress does not intervene beforehand, the fund could only settle around 91% of the claims from Part A from this year onwards.

This trust fund draws most of its income from assigned taxes paid by employees and employers.

Generally, employees pay 1.45% through wage tax withholding (although an additional 0.9% is charged for incomes over $ 200,000 for a single person or $ 250,000 for a married couple). Employers also contribute 1.45% on behalf of each employee. Self-employed people generally pay both the employer’s and the employee’s share.

The expansion of Part B benefits would not have a direct impact on the Part A Hospital Insurance Trust Fund solvency challenges.

Tricia Neuman

Executive Director of the Kaiser Family Foundation’s Medicare Policy Program

Meanwhile, Part B – which would include the extended benefits – will be funded from the monthly premiums of Medicare beneficiaries as well as from general federal government revenues. The same goes for Part D. And each year, premiums and revenue allocations are adjusted to reflect expected expenses and to ensure there are no shortfalls.

“The expansion of Part B benefits would not have a direct impact on the solvency challenges of the Part A Hospital Insurance Trust Fund,” said Tricia Neuman, executive director of the Kaiser Family Foundation’s Medicare program.

Nonetheless, she said, adding dental, vision, and hearing aids would have an impact on overall Medicare spending. A 2019 Congressional report, based on a bill that would have added these benefits, estimated the cost at $ 358 billion.

However, the Democrats’ current spending plan also includes the goal of allowing Medicare to negotiate with drug manufacturers – which is currently banned – as a possible way to pay for the extended benefits.

“The prescription drug savings would be used to offset these new costs … but there are many competing spending priorities for the savings that are on the table,” said Neuman.

The massive legislative package from the Democrats is still at the beginning of the debate. In addition to the Medicare benefits, some Democrats would like to introduce a lower Medicare Eligibility Age (currently 65).

Other health-related goals include expanding expanded health insurance premium subsidies through the Affordable Care Act’s public marketplace – which is now only in effect for 2021 and 2022 – and eligible-person coverage in states that haven’t expanded Medicaid.

It remains unclear whether the law that will be voted on in the end includes everything that is discussed – or whether current details of various provisions will be changed. For the extended Medicare benefits, the house measure would introduce eye and hearing protection in 2022 and 2023, respectively, while dental benefits would not begin until 2028.

“This is the next thing we’ve accomplished since launching the program to add these benefits,” said Lipschutz, of the Center for Medicare Advocacy.

“There is a feeling that if we don’t take this opportunity, another one won’t come for a long time,” he said.

As for the bankruptcy issues with the Part-A Trust Fund, there are several options that could help resolve the issue, Neuman said. For example, Medicare could cut payments to health care providers (hospitals, qualified care facilities, etc.) or to Advantage plans. Or the cost sharing of the beneficiaries – ie deductibles or co-payments – could be increased.

Alternatively, additional sources of funding could be identified. This could include ensuring certain taxpayers cannot evade Medicare employment tax – which the Democrats proposed to boost revenue – or diverting other taxes to the trust fund.

“None of the policy options are politically attractive, but at some point Congress will have to deal with this issue to ensure that the beneficiaries get the benefits they deserve and that the providers are paid,” said Neuman.