Ending Entitlements for Billionaires: Harder Than You Might Think!


Last month, Richard Posner wrote the following about means-testing entitlements: "Perhaps some politician will be bold enough to advocate that all entitlements programs, including social security as well as Medicare, be means-tested, as Medicaid is." But, he lamented, the political will to do so doesn't seem to exist.

He gets tears in his eyes just thinking about it.

Or does it? Bold is not a word I usually associate with either Republican House Speaker John Boehner or Democratic House Minority Whip Steny Hoyer, and it's an open question whether the term really applies to politicians who propose to cut back on taxpayer-funded entitlement handouts for millionaires and billionaires. But this week both Boehner and Hoyer have given thumbs up to reducing federally paid-for health benefits for gazillionaires by means-testing Medicare. Here's what Boehner said earlier this week at an event moderated by billionaire Pete Peterson, as reported by Brian Beutler:

"Pete, I love you to death, but I don't think the taxpayers ought to be paying your Medicare premium," Boehner said. "And under Paul Ryan's plan, what it says is, let's allow the American people to decide which health care plan fits their needs. And if you're middle-income, lower income, we are going to pay, just like we do today, for the cost of those premiums. But for people of means, there's no reason why we should subsidize Pete Peterson's premium. I'm sorry. He ought to pay the full cost of his premium to be in Medicare."

That sounds like means testing to me! And here's Hoyer with a far more qualified, but still kinda-sorta-possibly positive, response:

"Generally speaking, we do, as you know, have certain means testing in both Medicare and SS at this point in time. … I think clearly we're going to have to make both of those programs sustainable over the long run, and I think to some degree it would be clearly appropriate to look at—without endorsing any specific proposal—the insuring that the least well off are protected and to do that look at the best off … in terms of what level of support they get."

Is that the stink of bipartisan consensus in the air? Probably not: Democratic Rep. Henry Waxman, for example, isn't having any of it. "Medicare is a social insurance program where you get back for paying in, whether you are middle class, poor, or rich," he said in a statement. "If Mr. Boehner wants to have the wealthy contribute more to deficit reduction, he should look to the tax code." So it's not acceptable to reduce publicly subsidized benefits for wealthy seniors, but it's perfectly fine to ask seniors to pay more in taxes in order to keep providing them with health benefits they could be purchasing themselves?

Obviously there's no clear plan here to pass judgment on: GOP Rep. Paul Ryan's budget proposal would arguably make both Medicare and Social Security more progressive, but Democrats have shown approximately zero interest in supporting it. (Indeed, they've tended to hiss and recoil from any proposal to means test middle class entitlements.) One frequent objection to means testing is that programs targeted for the poor lack political influence, while programs for the middle and upper class tend to be more popular, and thus better protected. But that's a hard line to sustain with a program headed for collapse. Back in 2004, economist Mark Pauly, writing in Health Affairs, noted Medicare's onrushing fiscal troubles and made the point that means-testing the program could provide a way to avoid arbitrary rationing schemes. As Tyler Cowen wrote in 2008, "A more modest program, more directly aimed at those who need it, might prove more sustainable in the longer run." A modest, sustainable entitlement system? Seems unlikely. But it might be bold.