President Biden’s Fiscal Year 2025 Budget lays out his plan to invest in America and the American people, lower costs for families, protect and strengthen Social Security, Medicare, and Medicaid, and reduce the deficit.
Millions of Americans have been working their whole lives, paying into Social Security and Medicare with every working day, and want to know that they can count on these programs to be there when they need them. The President’s Budget extends the life of the Medicare Hospital Insurance (HI) Trust Fund permanently and reinforces the President’s commitment to protect Social Security and work with Congress to strengthen the program for the long haul, including by asking the highest-income Americans to pay their fair share—while rejecting all proposals to cut benefits.
The President’s Budget Protects and Strengthens Social Security
Social Security is the bedrock of financial security for American seniors and for millions of Americans with disabilities. As detailed in the President’s Budget, President Biden looks forward to working with Congress to protect and strengthen Social Security, based on these key principles:
- No benefit cuts. The President opposes any proposal to cut benefits, as well as proposals to privatize Social Security.
- Extending solvency by asking the highest-income Americans to pay their fair share. Currently, middle-class and lower-income Americans pay Social Security taxes on all of their earnings, but higher-income Americans do not. That’s not fair. The President believes that protecting Social Security should start with asking the highest-income Americans to pay their fair share.
- Improving financial security for seniors and people with disabilities. The President supports efforts to improve Social Security benefits, as well as Supplemental Security Income benefits, for seniors and people with disabilities, especially for those who face the greatest challenges making ends meet.
- Ensuring that Americans can access the benefits they’ve earned. The President supports investments in Social Security Administration (SSA) services so that seniors and people with disabilities can access the benefits they’ve earned.
Consistent with the final principle, the Budget invests in staff, information technology, and other improvements at SSA. The Budget would increase SSA’s funding by 9 percent from the 2023 enacted level, which would improve customer service at SSA’s field offices, State disability determination services, and teleservice centers for retirees, and for individuals with disabilities, and their families.
The President’s Budget Protects and Strengthens Medicare
The President’s Budget extends the life of the Medicare HI trust fund indefinitely, the Medicare Office of the Chief Actuary estimates. It achieves these gains without any benefit cuts—while, in fact, lowering costs for Medicare beneficiaries—by:
Extending Medicare HI trust fund solvency permanently by requiring wealthy people to pay their fair share toward Medicare and reducing prescription drug costs. The Budget extends HI trust fund solvency indefinitely by modestly increasing the Medicare tax rate on incomes above $400,000, closing loopholes in existing Medicare taxes, and directing revenue from the Net Investment Income Tax into the HI Trust Fund as was originally intended. Current law lets certain wealthy business owners avoid Medicare taxes on some of the profits they get from passthrough businesses. The Budget closes this loophole and raises Medicare tax rates on earned and unearned income from 3.8 percent to 5 percent for those with incomes over $400,000. In addition, the Budget directs an amount equivalent to the savings from its proposed Medicare drug reforms into the HI trust fund.
Lowering out-of-pocket costs and payments to Big Pharma. The Inflation Reduction Act gave Medicare the authority for the first time to negotiate prices for high-cost drugs in order to lower costs for seniors and people with disabilities. Medicare has already begun negotiating for lower prices on drugs to treat everything from diabetes, Crohn’s disease, arthritis, heart disease, cancer, and more. The President’s Budget would build on this progress by giving Medicare additional authority to negotiate down prices for more drugs and start negotiating prices sooner after drugs launch—which would not only save billions of dollars annually for the federal government, but would also save billions of dollars in out-of-pocket costs for consumers each year. It would also cap Medicare Part D cost-sharing on certain generic drugs, such as those used to treat chronic conditions like hypertension and high cholesterol, to $2 per monthly prescription. The President’s Budget would also lower behavioral health costs by eliminating cost-sharing for three mental health or other behavioral health visits per year and requiring parity between physical and mental health coverage in Medicare.
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