To pay for the changes, the legislation includes more than $400 billion in higher taxes over a decade, roughly half of it from a new Medicare payroll tax on individuals with incomes over $200,000 and couples over $250,000. A new excise tax on high-cost insurance policies was significantly scaled back in deference to complaints from organized labor.
In addition, the bills cut more than $500 billion from planned payments to hospitals, nursing homes, hospices and other providers that treat Medicare patients. An estimated $200 billion would reduce planned subsidies to insurance companies that offer a private alternative to traditional Medicare.
The insurance industry warned that seniors would face sharply higher premiums as a result, and the Congressional Budget Office said many would return to traditional Medicare as a result.
The subsidies are higher than those for seniors on traditional Medicare, a difference that critics complain is wasteful, but insurance industry officials argue goes into expanded benefits.
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