Via Think Progress, Julie Rovner has a good piece about means testing in Medicare.

A means test is a test to determine whether you get a particular benefit, not how much you pay for it. Medicaid is a means-tested program. So are Food Stamps.

If Medicare actually was means-tested, then wealthier people wouldn’t get the benefit at all.

The context of the President’s comments make it fairly clear that he’s talking about something else entirely. It’s called “income relating.” That’s when people with higher incomes pay more but get the same benefits as people who earn less.

Medicare currently has income-related premiums for Part B of the program and, under last year’s Affordable Care Act, will begin income-relating premiums for Medicare’s prescription drug program this year.

And this is the fundamental difference about Medicare and the other programs that Rovner names. The means-tested programs are seen as welfare programs and almost always at threat of coming under the budget knife. The universal programs like Medicare and Social Security, on the other hand, have a lot of political support and are much harder to slash.

By income relating Medicare, you start to break that link. You start to turn it into a welfare program, one that goes disproportionately to people who have little influence or allies in Washington. You make Medicare more vulnerable, not stronger. And the perfect way to show this is in the fact that Medicaid is losing funding now that the Recovery Act, which included a lot of state aid, is tapering off.

On July 1, all 50 states lost the additional Medicaid funds they’d been getting from the federal stimulus program. The extra aid totaled $100 billion over three years and helped states pay for the higher costs that go along with higher enrollments during a weak economy.

With the national unemployment rate seemingly stuck above 9 percent, those costs haven’t gone away. That’s part of why this has been a tough budget year in nearly every state.

But the drop from the stimulus cliff was steeper for some states than others, according to a recent report by Federal Funds Information for States. Hardest hit was Hawaii, which saw a 16 percent drop in funding. Now, the feds are picking up about 52 percent of the state’s $1.3 billion Medicaid program.

The next-most adversely affected were Louisiana (13 percent), Washington State (13 percent), Alaska (12 percent) and Nevada (12 percent). The states with the smallest adjustments were Kentucky and Alabama, at 9 percent each. The variation is primarily due to a disproportionate share of stimulus money going to states with big increases in their unemployment rates.

The matching rates are extremely important for how adequately Medicaid gets funded. The Administration is pushing a new “blended rate” for Medicaid, which would lower federal participation in the program and subject it to cuts at the state level.

Part of the problem here is running Medicaid as a federal-state partnership rather than just appropriating the money at the federal level. The other problem is that the program doesn’t have a lot of political clout. People generally support Medicaid, I think in part because it sounds a lot like Medicare, but it just doesn’t have champions at the same level. That’s why it’s vulnerable, like food stamps, which saw funding cut twice last year to pay for other priorities. Medicare shouldn’t be put into that role.

David Dayen

David Dayen

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