The White House released President Biden’s $6.8 trillion budget request for the fiscal year 2024. The budget includes increased taxes for wealthier income brackets, enhanced tax credits and a plan to delay Medicare insolvency. As is normally the case with a president’s budget proposals, many aspects will probably not be taken up by Congress – especially with a Republican-controlled House.

Biden’s plan aims to reduce the deficit by increasing certain taxes and repealing tax cuts passed during the Trump administration. The budget includes a 25-percent minimum tax on all the income of the wealthiest .01% of income earners, impacting those with a net worth of over $100 million. The budget proposal also includes a seven-percent increase in the corporate tax rate to 28 percent. In addition to these increased taxes, the president is requesting that Congress repeal previous tax cuts for single filers making more than $400,000 and married couples making more than $450,000; this means that the top tax rate would increase from 37 percent to 39.6 percent.

In terms of healthcare items specifically, the president’s budget proposal includes line items aimed at extending the Medicare Part A trust fund “by at least two decades.” Medicare insolvency has always been looming on the horizon, with Congress implementing small fixes to delay insolvency by just a few years at a time. As of now, the Trust Fund is scheduled to be exhausted by 2028.

How does the White House plan on extending Medicare’s solvency by 25 years or more? The budget proposes increase the Medicare net investment income tax rate on earned and unearned income above $400,000 from 3.8 percent to five percent while closing loopholes in existing Medicare taxes. (The net investment income tax, simply referred to as the 3.8 percent Medicare surtax, was an ACA provision to fund Medicare expansion.) The budget also includes a proposal to dedicate the revenue from the surtax increase directly into the Trust Fund.

Additionally, the Biden administration wants to allow Medicare to negotiate prices for more drugs and credit any savings from those drug negotiations to the Trust Fund. As we have mentioned previously, the Inflation Reduction Act (IRA) that passed in 2021 grants the secretary of HHS the ability to negotiate the prices of certain drugs for the Medicare program with new prices beginning in 2026. Ten Part D drugs will be negotiated in 2026, with an additional 15 Part D drugs in 2027, 15 Part B or D drugs in 2028, 20 Part B or D drugs in 2029, and 20 more drugs each year beyond that.

The budget proposal contains other Medicare-specific items, such as a cap on Part D cost-sharing on certain generic drugs to $2 per prescription per month, and the elimination of cost-sharing for three mental health or other behavioral health visits per year. The Biden administration is also seeking to enforce parity between physical health and mental health coverage in Medicare.

The budget also calls for capping the price of insulin at $35 per month for all consumers, including those covered by private health plans. The IRA already limited the price of each insulin prescription to $35 a month for Medicare beneficiaries as of this year. Capping the cost of insulin for private plans was featured in the earliest drafts of the IRA. However, now that Republicans hold a majority in the House, passing any package that caps insulin in the private market is highly improbable.

Outside of Medicare, President Biden wants a permanent extension of the American Rescue Plan Act’s (ARPA) extension of ACA subsidies, which are set to expire after 2025. As a reminder, ARPA – which passed in March 2021 – extended ACA subsidies to higher-income people who did not previously qualify for 2021 and 2022, increased subsidies for lower-income people who already qualified for 2021 and 2022 and provided the maximum subsidies for individuals who received unemployment benefits in 2021. This extended premium tax credits (PTCs) to those with incomes above 400 percent of the federal poverty level for 2021 and 2022, temporarily eliminating the ACA “subsidy cliff.” IRA extended these subsidies an additional three years.

Regarding mental health, President Biden’s budget proposal calls for millions more in funding for suicide prevention, substance use disorder treatment, and mental health workforce development. Specifically, HHS’ Substance Abuse and Mental Health Services Administration (SAMHSA) would dedicate $836 million to the 988 crisis hotline (an increase of $334 million), HHS would see an $80 million increase for mobile crisis response, and CDC would see a $50 million increase for its “suicide reduction efforts.” Biden’s budget proposes an overall funding of $10.8 billion for SAMHSA, an increase of $3.3 billion. Within that, mental health services would get a $2.2 billion raise. Regarding workforce issues, the budget calls for training 18,000 behavioral health providers for a total budget of $387 million. Of that, the president envisions using $28 million for recruiting and training new providers in underserved communities.

Source: National Association of Benefits and Insurance Professionals