*Please note that this letter is being sent to all Payroll Tax Cut Legislation Conferees

February 10, 2012

The Honorable Max Baucus
United States Senate
511 Hart Senate Office Building
Washington , D.C. 20510


Dear Chairman Baucus:

On behalf of the millions of members and supporters of the National Committee to Preserve Social Security and Medicare, I am writing to express our opposition to proposals you and other members of the conference committee on H.R. 3630 are currently considering that would increase means testing of Medicare Part B and D premiums to offset the costs of extending the Social Security payroll tax holiday, and/or preventing a 27.4 percent cut in payments to physicians due to Medicare’s Sustainable Growth Rate (SGR) formula.

In addition, while we appreciate the importance of stimulating the economy, the National Committee believes that extending the payroll tax cut is the wrong way to help struggling middle class Americans. The payroll tax cut undercuts the concept that Social Security benefits are an earned right that stems from the contributions that workers make to the program. And, it undermines the principle that Social Security is funded exclusively by workers’ contributions, and thus does not contribute to the deficits that continue to challenge this country. If the Social Security payroll tax cut is extended, we urge you to explicitly affirm the intent of the Congress to allow the provision to sunset at the end of the year.

We are particularly opposed to proposals that would increase costs to Medicare beneficiaries to help pay for an extension of the payroll tax cut. This would lead to the unfair situation of permanently increasing Medicare beneficiaries’ out-of-pocket costs to pay for a temporary tax cut from which few seniors would benefit. We strongly support legislation to ensure that Medicare payments to physicians are not cut on March 1, which would have an adverse impact on Medicare beneficiaries who could lose access to their doctors. However, the flawed SGR formula, which brings about the need for a “doc fix” every year, should not be corrected by increasing costs for Medicare beneficiaries.

It is important to remember that Medicare Part B has been means tested since 2007 for beneficiaries with incomes above $85,000 for an individual and $170,000 for a couple; Medicare Part D, the prescription drug benefit, is also means tested with the same income thresholds. Because these thresholds are frozen until 2019, the number of beneficiaries subject to means-tested premiums is already increasing. Proposals that would subject even more Medicare beneficiaries to income-related premiums would impact beneficiaries who certainly would not be considered higher income. For example, freezing the thresholds until 25 percent of

Medicare beneficiaries are subjected to income-related premiums, estimated to be in 2035, would affect individuals with incomes equivalent to $47,000 for an individual and $94,000 for a couple today, according to a February 2012 report from the Kaiser Family Foundation ( Income-Relating Medicare Part B and Part D Premiums Under Current Law and Recent Proposals: What are the Implications for Beneficiaries?).

Additional means testing would undermine the social insurance nature of Medicare , and ultimately raise costs for middle and lower-income seniors who depend on it. And if means testing results in Medicare becoming increasingly unfair to more beneficiaries, they may opt out and purchase their own policy on the private market. The departure of these higher-income beneficiaries, who tend to be younger and healthier, would increase overall costs and reduce public support for the program.

We ask you and other conferees to protect Medicare beneficiaries from higher out-of-pocket costs and, specifically, urge you to oppose expanding means testing of Part B and D premiums which would affect beneficiaries with modest incomes.


Max Richtman
President & CEO