Stark targets Medicare glitch for same-sex couples

A bill introduced today by Rep. Pete Stark aims to close a loophole deep in Medicare’s rules that has been costing seniors who are in same-sex marriages.

Medicare’s secondary payer rules generally let someone maintain employer-sponsored coverage after they’ve obtained Medicare eligibility. They don’t have to join Medicare Part B (covering certain doctors’ services, outpatient care, medical supplies and preventive services) and pay its monthly premium as long as they maintain that workplace insurance as their primary coverage and Medicare Part A (covering inpatient hospital stays, care in a skilled nursing facility, hospice care and some home health care) as their secondary coverage.

The law also protects people in this situation who later transition to Medicare Part B when they lose that employer-sponsored coverage: They don’t have to pay a late enrollment penalty, as would someone who simply waited to obtain Part B coverage until they got sick.

But Stark, D-Fremont, said constituent Joseph Goleman of Newark was told he would have to pay that late-enrollment penalty because he disclosed that he was in a same-sex marriage.

“The practical effect of my legislation is to provide people over age 65 in same-sex marriages the choice to remain on their spouse’s employer health coverage as their primary insurance, without facing significant financial penalties from Medicare in the future,” he said. “Regardless of one’s position on same-sex marriage, this small change in law makes financial sense for Medicare and will ensure consistent treatment of people regardless of their age.”

Current law has different definitions for family depending on whether one becoming eligible for Medicare through disability or through age. The definition is “family member” for people with disabilities includes legally-recognized same-sex marriages, but for those turning 65, the term is “spouse” – and the federal Defense of Marriage Act prohibits that term from including state-recognized same-sex marriages.

“Joseph knew what happened to him when he visited the local Social Security office didn’t feel right. Thankfully, he immediately reached out to my office and we were able get him the benefits he was due,” Stark said in a news release. “The confusion in current law is likely denying eligible beneficiaries the benefits they are due today – as it would have Mr. Goleman if he’d not reached out to me.”

Stark is the ranking Democrat on the Ways and Means Health Subcommittee that oversees Medicare.


Newest TV ads from Obama and Romney

President Barack Obama’s re-election campaign today rolled out an ad featuring former President Bill Clinton:

“Clear Choice” will air in New Hampshire, Virginia, North Carolina, Florida, Ohio, Iowa, Colorado and Nevada.

Meanwhile, Mitt Romney’s campaign launched its latest ad yesterday:

FactCheck.org hasn’t done an analysis of either ad yet, though it did post an extensive rundown on the competing claims about Medicare, including this observation:

A Romney campaign ad wrongly claims that “money you paid” for Medicare is being used to pay for Obama’s health care law. But the law doesn’t take money out of the existing hospital insurance trust fund. It cuts the future growth of spending. And in the future, seniors will still receive more in benefits than they paid in.

PolitiFact has its own rundown on Medicare as well.


Obama & Romney’s newest television ads

“Mitt Romney thinks that students should ‘borrow money’ from their parents to help pay for college or start a business, and under the Romney-Ryan budget, college aid would be cut for nearly 10 million students and the tax deduction for college tuition would be eliminated,” the Obama campaign said today in rolling out this ad. “President Obama, on the other hand, understands that a college education should be in reach for as many students as possible – and that’s why he has overhauled higher education financing by eliminating bank middlemen from college loans and used the savings to double funding for Pell Grants.”

The “Get Real” ad will air in Colorado, Iowa, Nevada, Ohio and Virginia.

“With every paycheck, Americans paid more and more into Medicare,” the Romney campaign said today in rolling out this ad. “Now, when you need it most, President Obama cut Medicare to pay for Obamacare. Mitt Romney and Paul Ryan will strengthen Medicare and protect the commitments made to current seniors.”


Newt Gingrich on Medicare, then and now

Newt Gingrich was thought to have doomed his then-nascent presidential campaign last May when he stiff-armed his own party’s budget plan on “Meet the Press.”

“I don’t think right-wing social engineering is any more desirable than left-wing social engineering. I don’t think imposing radical change from the right or the left is a very good way for a free society to operate. I think we need a national conversation to get to a better Medicare system with more choices for seniors,” Gingrich had said.

“I think that that is too big a jump,” he had said of the House GOP budget proposal to move Medicare from a system of direct government payment to doctors to one in which private insurance companies would manage a voucher-like system for seniors.

But Gingrich seems 100 percent OK with the new plan being rolled out by House Budget Committee Chairman Paul Ryan, R-Wisc. That plan includes a proposal – made jointly with Sen. Ron Wyden, D-Ore. – for an optional premium support plan, which according to them would “strengthen traditional Medicare by permanently maintaining it as a guaranteed and viable option for all of our nation’s retirees. At the same time, our plan would expand choice for seniors by allowing the private sector to compete with Medicare in an effort to offer seniors better quality and more-affordable health care choices.”

Here’s what Gingrich said today:

Newt Gingrich“The House GOP budget is a courageous plan that correctly understands the key to returning to a balanced budget is robust economic growth, spending control and bold entitlement reform, including the Ryan-Wyden optional premium support plan in Medicare. Chairman Ryan and the House Republican’s leadership stands in stark contrast with that of the Democratic Senate, which has once again, failed to produce a budget.”

“My plan to grow the economy and balance the budget differs in details but shares the same core principles as Ryan’s impressive effort. As president I would work very closely with Chairman Ryan to reform government and balance the budget.”

Yet Bay Area Democrats see little if any difference between what Ryan proposed last year and what he’s proposing this week. Rep. Pete Stark, D-Fremont, the ranking member on the Ways and Means Health Subcommittee that oversees Medicare, said:

Pete Stark“This year’s Republican Budget, once again, is a plan to dismantle the Medicare guarantee that Americans overwhelmingly support and that seniors and people with disabilities rely on.

“The Republican claim that their budget would preserve Medicare is both irresponsible and disingenuous. Beneficiaries would be given a voucher — crafted to decrease in value over time — to buy private insurance or try to stay in traditional Medicare.

“This Republican scheme would not only shift health care costs to seniors as their vouchers diminish, but will end Medicare as we know it. Private plans will cherry pick healthier folks, leaving the more sickly and elderly in what amounts to a faint memory of traditional Medicare as costs rise beyond their reach.

“Importantly, the Republican budget would not require plans to provide defined benefits as Medicare does today, thus ending the Medicare guarantee that has defined the program for decades.

“What’s more, the Republican budget would undo the consumer protections provided by Medicare and put private health insurers back in charge.
“Enacting the Republican plan would be devastating to the health and financial security of America’s senior citizens and people with disabilities. I will fight this plan to take America backward.”

House Minority Leader Nancy Pelosi, D-San Francisco, said Ryan’s plan lets Medicare “wither on the vine … The American people have already rejected this plan before – and this year will be no different. Americans’ priorities are clear: Republicans must work with Democrats to preserve and strengthen Medicare, not dismantle it.”


Pete Stark jabs at Gingrich with ‘NEWT Act’

Rep. Pete Stark gave Republican presidential candidate Newt Gingrich a political poke in the eye today by introducing a bill to close a loophole that lets certain self-employed people – including lobbyists – lower their Medicare payroll tax liability by calling their earnings profits or dividends rather than wages.

Pete StarkStark, D-Fremont – the ranking Democrat on the Ways and Means Health Subcommittee, which oversees Medicare – calls it the Narrowing Exceptions for Withholding Taxes Act.

Yes, that’s right: The NEWT Act.

The bill, Stark says, was inspired by Gingrich’s recently released 2010 tax returns, which showed he used the loophole to save an estimated $69,000 in Medicare taxes.

“It seems Gingrich is continuing to do his part — in his own infamous words — to let Medicare ‘wither on the vine.’” Stark said in a news release. “By taking full advantage of a tax loophole often used by wealthy self-employed lawyers and lobbyists to slash their tax liability, Gingrich is happy to undermine Medicare. This tax dodge throws cold water on his feigned concern for the future of Medicare.”

This provision passed the House of Representatives in 2009 as part of HR 4213, the American Jobs and Closing Tax Loopholes Act of 2010; at the time, the Joint Commission on Taxation estimated that closing this loophole would save taxpayers $11.2 billion over ten years.

Newt GingrichAll earners are subject to a 2.9 percent tax on wages, which helps fund Medicare, but employee-shareholders at S corporations can use an existing loophole to shield earnings from the Medicare tax by classifying them as profits or dividends instead of as wages. For 2010, Gingrich reported $444,327 of his earnings as wages from Gingrich Holdings, Inc. and Gingrich Productions. By classifying another $2.4 million in profits or dividends he avoided paying an estimated $69,000 in Medicare taxes.

Stark’s NEWT Act would expand the income categories that are subject to Medicare payroll taxes so employee-shareholders of S corporations could no longer avoid paying this tax by reporting artificially low wage income and correspondingly higher dividends or profits. Certain employee-shareholders of S corporations would have to calculate their Medicare payroll tax obligation based on their share of the S corporation’s profits or dividends, not just income reported as wages. The individuals subject to the provision are the employee-shareholders of a professional service business where the principal assets of that business are the skills and reputations of three or fewer individuals.

The bill targets the S corporations that have been identified as the most likely to abuse the system, Stark said: professional service businesses engaged in health, lobbying, law, engineering, architecture, accounting, actuarial science, performing arts, consulting, athletics, brokerage services, or investment advice or management.

The Government Accountability Office estimates that in the 2003 and 2004 tax years, individuals who used S corporations underreported more than $23 billion in wage income; the median misreported amount was $20,127.

Stark’s news release cited a New York Times article to illustrate that it’s a bipartisan problem: Former U.S. Senator and 2004 Democratic vice presidential nominee John Edwards used the same method to avoid $591,112 in Medicare payroll taxes over four years in the late 1990s.


GOP holds its own Silicon Valley town hall

Hours after President Obama held a town hall meeting on job creation Monday morning at the Mountain View headquarters of social networking site LinkedIn, three top House Republicans held a similar forum at the Palo Alto headquarters of Facebook.

The discussion and question-and-answer session with House Majority Leader Eric Cantor, R-Va.; and Majority Whip Kevin McCarthy, R-Bakersfield; and House Budget Committee Chairman Paul Ryan, D-Wisc., was moderated by Facebook Chief Operating Officer Sheryl Sandberg, who held a $35,800-a-plate fundraising dinner for President Obama on Sunday night at her Atherton home.

Generally, they spoke about the need to reform the tax code to eliminate corporate loopholes so that everyone pays, and so everyone pays less; reforming entitlement programs such as Social Security, Medicare and Medicaid so that we can afford them; and bringing the kind of innovative interaction to Washington that has made Facebook such a success.

Cantor said Republicans in coming weeks will be looking at rolling back regulations that they believe tie the hands of small businesses. Among those are environmental protection rules, which must be balanced with business’ needs, he said; they’ll also try to roll back some of the recent financial reforms that have made it too hard for small businesses to get credit and capital.

McCarthy said the key to entitlement reform could be a bipartisan agreement that neither side will demonize the other, but instead, everyone will put all options on the table and let the public decide. He exhorted citizens to “join in, engage, do not sit back.”

Ryan said he didn’t want to serve on the new Joint Select Committee on Deficit Reduction – often called the “super committee” – because he believes there’s so much more to do beyond that panel’s appointed task. Achieving $1.2 trillion in deficit reduction would be “a nice step in the right direction,” he said, but he’s contemplating a proposal to enact a whole new budgeting process to control future spending.

In a “lightning round” of mini-questions from Sandberg, Ryan opted for entitlement reform even over tax reform. “Our government, both political parties, has been making promises to people we can’t keep,” he said, so current recipients should be protected but future benefits should be reigned in with higher retirement ages and wage-indexed benefits for Social Security and private insurance options under Medicare.

The nation is at “a very precarious time right now” and must have a safety net for the needy, he said, but not “a hammock that lulls able bodied people into lives of complacency.”

Ryan will speak and answer questions on health care reform tomorrow at the Hoover Institution at Stanford University.