Biden proposes increasing taxes on wealthy, expanding drug negotiations to shore up Medicare

President Joe Biden proposed to increase taxes on Americans earning above $400,000 and expand the number of drugs Medicare can negotiate the price on in his latest budget proposal. 

“The budget I am releasing this week will make the Medicare trust fund solvent beyond 2050 without cutting a penny in benefits,” Biden wrote in an op-ed Wednesday in The New York Times

Biden gave a preview of the White House’s budget proposal expected to be released Thursday. He called for reforms to shore up the Medicare hospital trust fund expected to run out of money in 2028. 

The president called for expanding on drug price reforms passed as part of the Inflation Reduction Act last year, which gave Medicare the power to negotiate prices for a small subset of drugs starting in 2026. 

“My budget will build on drug price reforms by strengthening Medicare’s newly established negotiation power, allowing Medicare to negotiate prices for more drugs and bringing drugs into negotiation sooner after they launch,” Biden wrote.

He did not specify how many more drugs would be subject to negotiation. Under the Inflation Reduction Act, the federal government will pick 10 Part D drugs subject to negotiation in 2026, and that figure will scale up to 20 Part B and D drugs by 2029 as well as more in later years.

Currently, a small-molecule drug can be on the market for nine years until it is subject to negotiation and a biologic 13 years. 

Biden said any savings will be put directly into Medicare’s trust fund.

He also called for raising taxes on wealthy Americans. The budget will propose to boost the Medicare tax rate on earned and unearned income above $400,000 from 3.8% to 5%. 

“My budget will also ensure that the tax that supports Medicare can’t be avoided altogether,” the op-ed said. “This modest increase in Medicare contributions from those with the highest incomes will help keep the Medicare program strong for decades to come.”

White House budgets typically don’t get passed by Congress—especially in this case with the GOP in control of the House—but they do offer insight into the administration’s priorities on healthcare and other policy.