From the category archives: privatization
Congress may be home for Easter break and President Trump is busy dropping bombs in Syria and Afghanistan, but the War on the Working Class continues unabated. In fact, it was quite a busy week for floating dangerous ideas about our nation’s healthcare and retirement security.
First, the Associated Press ran a story based on information from an unnamed “GOP lobbyist” saying that Republicans are considering repealing the Social Security payroll tax. Under this alleged plan, Social Security would be funded from general revenue and therefore subject to competition with other domestic programs --- and the whims of Congressional budget cutters. Never mind that the payroll tax is what makes Social Security an earned benefit. President Franklin D. Roosevelt set it up that way on purpose to “give the contributors a legal, moral and political right to collect” their Social Security checks. Plus, the current payroll tax deduction has been working pretty well for the past 80 years.
Since enough members of Congress realize this is an awful proposal that would never pass the House and Senate, clearly someone is out there floating crazy ideas in the press. (In addition, the A.P. story itself lacked any real sense of balance or context.) While the source for the A.P. story was unnamed, a top Trump administration official very publicly floated notions that seem to undermine President Trump’s promise not to touch Social Security and Medicare. In an interview with CNBC’s John Harwood on Tuesday, Budget Director Mick Mulvaney just couldn't say whether President Trump would veto legislation to privatize Medicare. “Let [Congress] pass that and let’s talk about it,” he demurred.
When Harwood asked if Social Security Disability Insurance (SSDI) was on the list of potential programs to be cut, Mulvaney offered this non-reassuring response:
“I continue to look forward to talking to the president about ways to fix that program. Because that is one of the fastest growing programs that we have. It's become effectively a long-term unemployment, permanent unemployment program.” – Mick Mulvaney
Of course, that response is riddled with inaccuracies. SSDI is not growing, it’s leveling off at a lower rate that is likely to plateau for the next 20 years. It most definitely is not an unemployment program of any kind – permanent or otherwise. SSDI is one of the strictest federal disability programs in the world in terms of qualifying for benefits. Only those who are able to demonstrate that they are unable to work for medical reasons qualify. Among all the people who apply, only 40% are accepted. If accepted, the average beneficiary receives only $1,170 per month, less than one could earn in a full time job at the federal minimum wage.
That didn’t stop the Washington Post from echoing some of the same right-wing myths about SSDI in a recent feature story and an editorial entitled, “The Social Security Disability Program Needs Reform.” The story wrongly intimates that rural, working-class Americans are using SSDI as a unemployment program. On Monday, Media Matters for America attempted to correct the record:
“The Post’s mischaracterization of SSDI follows a long history of misinformation from mainstream outlets, which often publish error-riddled stories filled with anecdotal evidence portraying disability recipients as undeserving. These pieces sound as if they come from right-wing media, which have spent years attacking the program and its recipients.” – Media Matters, 4/10/17
While the press was replete with nutty notions about Social Security and Medicare, the President and Congressional Republicans were reviving the specter of the moribund GOP healthcare bill. Just when you thought it was dead, Freedom Caucus members say they are close to a deal with the White House and Speaker Ryan to repeal and replace Obamacare within three weeks. Meanwhile, Politico reports that President Trump is threatening to cut off cost-sharing subsidies that help pay for low income earners’ health coverage in order to force Democrats to the negotiating table on the GOP health plan.
Fortunately, protesters are out in full force this week at town halls pushing back against supporters of the Republican bill, including one of the National Committee’s own grassroots volunteers who organized a rally outside a Florida congressman’s office. This proves that Spring break is a good time for grassroots action. Just because it’s holiday time doesn’t mean those waging war against the working class won’t put some rotten eggs in our Easter baskets.
Speaker Paul Ryan made some extraordinary statements on today's CBS This Morning – even for him. First, he chastised President Trump for offering to work with Democrats on health care reform, saying it was “hardly a conservative thing” to do. The reason: “Democrats are not for repealing Obamacare. We are.” Clinging to ideology over reality, Ryan declared, “I don’t want government running healthcare.” Oh really? Has he heard of a program called Medicare? Oh, that’s right - he wants to privatize it. Ryan hasn’t gotten around to turning Medicare into a voucher program just yet, but at least seniors can rest easier knowing that the GOP health plan went down in flames.
Less than a week later, a rift seems to be opening between the President and the Speaker on this issue. President Trump may have finally realized that the only way to get a real healthcare fix through Congress is to work with Democrats and stop coddling right-wingers in the House. He even fired off a tweet this morning aimed squarely at the ultraconservative House Freedom Caucus, which helped defeat the Republican plan:
"The Freedom Caucus will hurt the entire Republican agenda if they don't get on the team, & fast. We must fight them... in 2018!” – Trump Tweet, 3/30/17
Of course, Democrats won’t work with Trump unless he gives up on repealing Obamacare and pivots toward fixing its flaws. That’s something Ryan and the House Republicans have refused to do during the entire seven years that Obamacare has been “the law of the land.” In fact, Republicans have taken measures both on the Hill (and in the new Trump White House) to actively undermine the law. Trump’s offers to work with Democrats won’t mean much unless his HHS Secretary and his administration refrain from manipulating regulations to stifle Obamacare.
This afternoon, Congressman Luis Gutierrez (D-IL) told CNN, “[Obamacare] needs to be modified to give more people coverage. If Trump wants to do that, I’m all for working with him.”
It’s hard to believe, but in this case Trump – not Ryan – may be taking the more politically savvy approach. Here’s why: the American people by and large loathe the defeated GOP healthcare bill. A new Associated Press poll indicates 62% of Americans dislike the dead GOP legislation. Here’s an even more eye-opening number: 8 in 10 Republicans oppose the provision that would have allowed insurers to charge seniors 5 times as much as younger people. President Trump’s spider sense has told him to move toward the middle on health care. Meanwhile, Paul Ryan threatens to bring the moribund GOP healthcare bill back to life. He would be wise to study those poll numbers and let sleeping bills lie.
If you missed our Facebook Live discussion with Social Security champion, Rep. Jan Schakowsky (D-IL), you can watch it here.
Older voters have been gravitating to the Republican party for the better part of the past two decades. Forty-eight percent of seniors identify or lean Republican compared to 45% for Democrats --- and Donald Trump won 53% of the senior vote last Fall. But are we about to witness a “grey” re-alignment? According to an article in today’s The Hill newspaper, Democrats say maybe so. Democratic strategists are hoping that Republicans are starting to repel seniors by striving to repeal Obamacare, gut Medicaid, privatize Medicare and cut Social Security. It doesn’t help that President Trump’s proposed budget slashes federal block grants that help pay for Meals on Wheels and other programs that stabilize and support seniors.
In a Facebook Live broadcast with National Committee President Max Richtman today, Congresswoman Jan Schakowsky (D-IL) agreed that seniors may swing back to the Democratic party in the next election cycle. “Republicans like to imply that seniors are greedy geezers,” Schakowsky said, “But their Obamacare replacement would have allowed seniors to be charged up to 500% more than younger Americans for private health insurance.”
There are myriad reasons for older voters’ preference for the GOP in recent years. The majority of white voters identify as Republicans --- and some 85% of today’s seniors are white. Many of today’s older voters came of age during the prosperous post-war America of the 1950s – and may feel alienated by cultural changes associated with the Democrats. In fact, candidate Trump skillfully played on seniors’ nostalgia for a bygone (and in many ways, imaginary) America.
Another factor may be that seniors have felt supremely confident – some would say overly confident – about the sanctity of the two federal programs that benefit them the most, Social Security and Medicare. The Democrats may have done such a good job protecting these programs that seniors simply take them for granted. In fact, the last time that the majority of seniors voted Democratic was in the 2006 congressional elections, after President George W. Bush tried to privatize Social Security. Democrats and seniors’ advocates like the National Committee stopped him. On the other hand, President Trump won the senior vote not only by thrumming the strings of nostalgia, but by promising not to touch Social Security, Medicare, and Medicaid (promises he is already breaking).
To win back seniors in 2018 and beyond, Democrats must remind them that Republicans are an existential threat to our cherished retirement and health security programs. In other words, thanks to the GOP, the time for overconfidence in the inevitability of Social Security, Medicare and Medicaid is over. President Trump is already shattering his sacred promises to older voters. He fought for the GOP’s American Health Care Act which would have cut nearly $1 trillion from Medicaid (on which poorer seniors depend for long-term care) and reduced the solvency of Medicare by three years. House Speaker Paul Ryan still dreams of turning Medicare into a voucher program. Congressman Sam Johnson (R-TX) is pushing a bill to cut cost of living adjustments (COLAs) for Social Security and raise the retirement age to 69. And despite his campaign vows, the president has surrounded himself with budget hawks who are sharpening their knives for seniors’ earned benefits programs. (Earlier this month, Budget Director Mick Mulvaney questioned whether disability benefits should even be a part of Social Security.)
Democrats must also bust the oft-repeated myths that Republicans use to justify benefit cuts --- that Social Security and Medicare are going “bankrupt” and need to be “modernized” (translation: privatized and cut). If Congress does nothing, Medicare still will be able to pay 87% of benefits beyond its 2028 “insolvency” date and Social Security 79% of benefits beyond 2034. To win the senior vote, Democrats must push the kind of modest and manageable solutions proposed by Senator Bernie Sanders, Congressman John Larson (D-CT), and others to keep these programs solvent for the long haul – with no benefit cuts.
Recent polling suggests that the party who sides with seniors on these crucial issues will reap political gains. The National Committee’s own poll of likely voters showed overwhelming support for traditional Social Security and Medicare. Even more encouraging, strong majorities opposed benefit cuts and higher eligibility ages --- and favored boosting benefits by scrapping the payroll tax cap so that the wealthy pay their fair share. As long as Democrats back up their rhetoric with action and vigorously oppose harmful changes to Social Security, Medicare, Medicaid, and Obamacare, they have a decent shot at winning back those coveted seniors at the ballot box.
Let us not speak of pigs and lipstick, but simply say that the freshly tweaked GOP health care bill introduced last night still socks it to older Americans. In an attempt to throw bones to both moderate Republicans and Tea Partiers, Speaker Paul Ryan has come up with a revised bill that’s even worse than the original for seniors and “near seniors” (under 64 years of age). The Center for Budget and Policy Priorities has just released a detailed analysis forecasting higher net premiums, co-pays, and out-of-pocket costs for older Americans under the revised bill. Here is our own take on why there's nothing to like in the tweaked legislation:
Millions of seniors depend on Medicaid to cover the cost of long-term care, while low income Americans 50-64 rely on the program for basic health care. The original GOP bill cut nearly $1 trillion from Medicaid and imposed per capita caps on federal payments to the states. The revised legislation adds another insidious idea to the equation by introducing block grants, where states can decide to curtail or outright cut certain services. Per capita caps and block grants mean one thing: less funding for older patients who need medical services and long-term care - and in some cases, complete loss of coverage. For seniors, It’s two bad ideas in one bill.
The revised GOP bill does nothing to address a major problem with the original. Under the revised legislation, Insurance companies would still be able charge older Americans up to five times as much as people in their 20s (a practice referred to as “age rating”), one reason why the Congressional Budget Office estimated that 24 million people would lose coverage under the Republican plan.
Obamacare provided generous subsidies to people who couldn’t afford private insurance premiums. The GOP bill replaced those subsidies with paltry tax credits that discriminate against older patients. Paul Ryan’s tweaked version kicks the problem over to the Senate by authorizing the upper chamber to increase tax credits for older Americans… if it wants to. There’s no guarantee the Senate will actually do this, or that fatter tax credits will make it into the final bill. Once again, the revised GOP plan leaves older folks worse off.
While giving nothing to seniors, the revised bill still repeals $600 billion in tax cuts for the wealthy (and $24 billion for pharmaceutical companies) that Obamacare utilized to expand health coverage and strengthen Medicare. The tweaked bill actually sweetens the deal for the wealthy – repealing the taxes in 2017 instead of 2018.
The GOP plan still weakens Medicare through the repeal of a 0.9% tax on income over $200,000. By rescinding the tax, the GOP plan reduces the solvency of Medicare by 3 years – and the revised bill does nothing to lengthen it. Reducing Medicare’s solvency gives budget hawks an excuse to privatize and cut the program, which hurts seniors.
We don’t know whether the dressed-up GOP plan will pass the House. It’s possible that the concessions to Tea Partiers and token gestures to moderates – plus active lobbying on President Trump’s part – will allow it to squeak by. Either way, Speaker Ryan squandered an opportunity to reverse some of the damage to healthcare and long-term care for our older and most vulnerable citizens.
National Committee President Max Richtman has rightly called the GOP Obamacare replacement “a triple whammy for seniors” because of its impacts on the private insurance market, Medicare, and Medicaid. Yesterday’s report from the Congressional Budget Office confirms this grim assessment. Of the 24 million Americans who will lose health coverage over the next decade, many will be seniors and “near-seniors” aged 50-64 who can least afford to go without much needed medical care.
PRIVATE HEALTH INSURANCE
On the private health insurance front, the CBO projects that premiums will rise by more than 20% for older Americans. This is mainly because the bill allows insurers to charge older customers up to 5 times more than younger ones. At the same time, the GOP legislation yanks the financial rug from underneath older enrollees by replacing generous Obamacare subsidies with meager tax credits. According to today’s New York Times:
“The CBO estimates that the [net] price an average 64-year-old earning $26,500 would need to pay… would increase to $14,600 under the Republican plan.” – New York Times, 3/14/17
The Times reports that older American’s out-of-pocket insurance costs would also rise:
“The hypothetical older customer who could pony up $14,600 for insurance under the GOP plan would also pay substantially more out of pocket for any health care services. And changes to the requirements for health plans mean that, across the board, deductibles and cost-sharing will increase.” – New York Times, 3/14/17
The reason for the word “hypothetical” is that most older Americans would not be able to afford $14,000 in premiums, let alone rising deductibles and co-pays. Unable to pay these exorbitant prices, millions of “near seniors” (aged 50-64) will simply have to drop their health insurance during those crucial years before they are eligible for Medicare and need it most.
The GOP phase-out of Obamacare’s Medicaid expansion will also hit near seniors in the lower income brackets particularly hard. As a result of these changes, the CBO finds that people between 50 and 64 years old earning less than 200% of the federal poverty level would make up a larger share of the uninsured, from just over 10% under Obamacare to nearly 30% under the Republican replacement. To re-iterate: 30% of near seniors earning a modest income will lose healthcare coverage from Medicaid. That’s nearly one third of the lower income seniors who benefited from the Obamacare Medicaid expansion.
The GOP bill also radically restructures Medicaid by ending guaranteed federal matching funds to the states and effectively cutting $880 billion from the program over ten years. Cash-strapped states will be compelled to compensate for this shortfall by cutting benefits and eligibility for Medicaid. The CBO estimates that 14 million people will be forced off of Medicaid rolls by 2026. This is particularly bad news for seniors who rely on Medicaid to pay for long term care services and supports when their personal savings are depleted. Those seniors will either have to rely on their financially-squeezed families to pay for long term care, or be forced to forgo the care they need.
According to the CBO report, the Republican health plan achieves most of its budget savings by rescinding taxes on higher-income Americans. Unfortunately for current and future retirees, those tax revenues were helping to keep the Medicare program on a sound financial footing. By repealing a $117 billion tax on income above $200,000 a year, the GOP bill reduces the solvency of Medicare by 3 years.
In a perversely self-fulfilling prophecy, the very budget hawks who insist that Medicare needs to be “reformed” because of its solvency problems are now making the program even less financially sound. This opens the door for the “reformers” to argue even more vehemently for privatizing Medicare and turning it into a voucher program, which will hurt seniors with low or modest incomes.
REVERSE ROBIN HOOD
In reviewing the CBO analysis, a theme quickly emerges. The Republican plan rips benefits away from lower income and older Americans while rewarding upper income earners with billions of dollars in tax breaks. It achieves federal budget savings on the backs of the people who can least afford to sacrifice. The young, healthy and wealthy do better under the GOP plan. With the triple assault on Obamacare, Medicaid, and Medicare, seniors and near seniors are left in the cold. As National Committee president Max Richtman likes to say, the Republicans’ message to older Americans seems to be, “You are going to be on your own and good luck… and I'm not even sure about the ‘good luck’ part.”
We discussed Trumpcare's impact on older Americans on Facebook Live "Behind the Headlines." Watch here.
Read the National Committee's response to the CBO report here.
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