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GOP Budget Plan: Even More Cuts for Seniors in Medicare

In keeping with every GOP budget passed over many years, benefit cuts for average Americans and tax cuts for the wealthy rule the day.  The Senate this week will pass the Budget Conference Report (it only needs a majority, which the GOP now has) including massive benefit cuts for seniors in Medicare.  

National Committee policy staff has laid out what this Budget bill means for seniors in our letter to the Senate:  

The conference agreement would be devastating to today's seniors and future retirees, people with disabilities and children due to the proposed changes it makes to Medicare, Medicaid and the Affordable Care Act.  While it proposes huge cuts to our social insurance safety net, the conference report would give massive tax cuts to the very wealthy. The conference agreement assumes the privatization of Medicare and achieves savings by shifting costs to Medicare beneficiaries.  Beginning in 2024, when people become eligible for Medicare they would not enroll in the current traditional Medicare program which provides guaranteed benefits.  Rather they would receive a voucher, also referred to as a premium support payment, to be used to purchase private health insurance or traditional Medicare through a Medicare Exchange.  The amount of the voucher would be determined each year when private health insurance plans and traditional Medicare participate in a competitive bidding process.  Seniors choosing a plan costing more than the average amount determined through competitive bidding would be required to pay the difference between the voucher and the plan's premium.  In some geographic areas, traditional Medicare could be more expensive.  This would make it harder for seniors, particularly lower-income beneficiaries, to choose their own doctors if their only affordable options are private plans that have limited provider networks.  Wealthier Medicare beneficiaries would be required to pay a greater share of their premiums than lower-income seniors.

The plan to end traditional Medicare requires private plans participating in the Medicare Exchange to offer insurance to all Medicare beneficiaries.  However, it is likely that plans could tailor their benefits to attract the youngest and healthiest seniors and still be at least actuarially equivalent to the benefit package provided by fee-for-service Medicare.  This would leave traditional Medicare with older and sicker beneficiaries.  Their higher health costs would lead to higher premiums that people would be unable or unwilling to pay, resulting in a death spiral for traditional Medicare.  This would adversely impact people age 55 and older, including people currently enrolled in traditional Medicare, despite the conference agreement’s assertion that nothing will change for them.

The conference report threatens to shift costs to Medicare beneficiaries.  S. Con. Res. 11 contains $431 billion over ten years in unnamed Medicare cuts.  Over half of Medicare beneficiaries had incomes below $23,500 per year in 2013, and they are already paying 23 percent of their average Social Security check for Parts B and D cost-sharing in addition to paying for health services not covered by Medicare.  When coupled with requirements to shift costs to beneficiaries in the Medicare Access and CHIP Reauthorization Act of 2015 (P.L. 114-10), the unspecified Medicare benefit cuts included in the conference agreement would be burdensome to millions of seniors and people with disabilities.

In addition, the conference agreement calls for repealing provisions in the Affordable Care Act (ACA), which would make health insurance inaccessible for seniors age 64 and younger.  Without the guarantees in the ACA, such as requiring insurance companies to cover people with pre-existing medical conditions and to limit age rating, younger seniors may not be able to purchase or afford private health insurance.

Repealing the ACA would also take away improvements already in place for Medicare beneficiaries – closing the Medicare Part D coverage gap, known as the "donut hole"; providing preventive screenings and services without out-of-pocket costs; and providing annual wellness exams.  The Centers for Medicare and Medicaid Services recently reported that since the passage of the ACA, over 9.4 million Medicare beneficiaries in the Medicare Part D donut hole have saved $15 billion on their prescription drugs, an average of $1,595 per person.  An estimated 39 million people with Medicare took advantage of at least one preventive service with no cost sharing in 2014.

The agreement includes reductions to Medicaid funding that would affect low-income seniors.  Medicaid provides funding for health care to help the most vulnerable Americans, including low-income seniors, people with disabilities, children and some families.  The conference report would end the current joint federal/state financing partnership and replace it with fixed dollar amount block grants, giving states less money than they would receive under current law.  In exchange, states would have additional flexibility to design and manage their Medicaid programs.  The proposed block grants would cut federal Medicaid spending by $500 billion over the next 10 years.  Giving states greater flexibility in managing and designing their programs in no way compensates for the significant reductions that beneficiaries, including nursing home residents and their families, could face by turning Medicaid into block grants.

The conference report also would repeal the Medicaid expansion in the ACA. Beginning in 2014, states have had the option to receive federal funding to expand Medicaid coverage to uninsured adults with incomes up to 138 percent of the federal poverty level ($16,242 for an individual in 2015).  Over half of the states have expanded their Medicaid programs, and some others will likely participate in the future.  The conference agreement would hurt states and low-income individuals by repealing Medicaid expansion, taking away $900 billion from the program over 10 years.  Altogether, S. Con. Res. 11 cuts the Medicaid program by more than $1.4 trillion over 10 years, compared to current law.

Moreover, the conference agreement puts 11 million severely disabled Social Security Disability Insurance (SSDI) beneficiaries at risk of a 20 percent benefit cut next year by reaffirming a House rule requiring legislation to address the financing of the SSDI program be accompanied by revenue increases or much more likely benefit cuts.  That’s why the National Committee urges the Senate to reject the House’s SSDI recommendations in the conference report and instead make a modest reallocation of Social Security payroll taxes from the retirement trust fund to the Disability Insurance Trust Fund as has been done 11 times in the past on a bipartisan basis.

The National Committee urges you to oppose the Conference Report on the FY 2016 Budget Resolution, which would be harmful to seniors, people with disabilities and children."

 

 

Social Security Numbers to be Removed from Medicare Cards

It was one of the National Committee’s Legislative priorities this year and we’re happy to report that Social Security numbers will now be removed from Medicare cards.  As the incidence of identity theft has risen it’s become clear that imprinting more than 50 million benefit cards with Americans’ Social Security numbers on the front put millions at risk.  That’s why we supported legislation which would require the numbers be removed.

But it doesn’t come without a cost.  The New York Times describes the funding:

Congress provided $320 million over four years to pay for the change. The money will come from Medicare trust funds that are financed with payroll and other taxes and with beneficiary premiums.

In his budget for 2016, Mr. Obama requested $50 million as a down payment “to support the removal of Social Security numbers from Medicare cards” — a step that federal auditors and investigators had been recommending for more than a decade.

More than 4,500 people a day sign up for Medicare. In the coming decade, 18 million more people are expected to qualify, bringing Medicare enrollment to 74 million people by 2025.

Medicare now has up to four years to start issuing new numbers on cards for new beneficiaries and four more years to reissue cards for those already in Medicare. Social Security numbers will be replaced with “a randomly generated Medicare beneficiary identifier.”  The details are still being worked out.

Decades of Bad Social Security & Medicare Proposals Rolled into One – Courtesy of Governor Chris Christie

Hyperbole -- fact twisting and sheer omission -- false truths presented by “courageous truth-tellers.”  None of this is really new to American politics.  However, today New Jersey Governor Chris Christie deployed all of these time-worn propaganda techniques to unveil his plan to cut $1 trillion in benefits (that’s $1,000,000,000,000) from generations of Americans who will depend on Social Security, Medicare and Medicaid. 

He says it’s all about “fairness.”  However, he proposes not a single dime of new revenue and has no problem with average Americans paying payroll taxes on all of their income while the wealthy do not. 

Apparently, slashing pensions in New Jersey to preserve his no tax pledge simply isn’t enough.  Now he hopes to do the same nationwide.  In spite of his promise to offer the GOP Presidential primary race something new, today’s comments were merely a recitation and doubling-down on the same GOP claims that our nation can’t afford to honor its commitment to America’s workers and future retirees. 

NCPSSM President/CEO, Max Richtman, sums it up this way:

“The Governor’s plan to means-test Social Security, cutting off some Americans and transitioning the program from an earned benefit to welfare has long been the goal of those who oppose social insurance programs. It seems the Governor acknowledges that his flagging Presidential campaign needed a jolt because today’s speech was far more about burnishing Governor Christie’s conservative credentials than offering new proposals that could help America’s workers and retirees. He certainly isn’t showing bold leadership by claiming we must cut middle-class benefits, while protecting tax expenditures benefiting huge corporations and the wealthy.  That’s been the GOP position for a very long time. Today Governor Christie joins a long line of conservative politicians who hope to convince voters they are “courageous truth-tellers” when in truth their goal is to dismantle the very programs which have kept millions from poverty.

The majority of Americans – of all ages, no matter their political party -- opposes cutting already modest benefits and is willing to pay more to boost the program. They understand Social Security and Medicare are not welfare programs nor should they be.  Getting any GOP Presidential candidate to acknowledge that fact takes true political courage. But unfortunately that’s not the ‘red meat’ the GOP’s conservative base expects to hear nor the truth candidates like Governor Christie are willing to tell.”...Max Richtman, NCPSSM President/CEO

While he claims “no one” will talk about cutting benefits like he will, the fact is, the past decade has seen numerous attacks on the programs from Presidents, Presidential commissions, Congressional “Gangs of 6” and too many legislative proposals to even list here.  Senate Governor Christie is merely the latest in a growing list of GOP Presidential candidates who all promote the same “strengthen = slash” approach.  They tout their protection of poorer seniors while proposing benefit cuts, cost sharing and means testing that will impact millions of poor and middle-class beneficiaries.  Each candidate also follows the conservative-crafted playbook which promises current retirees (who consistently vote) will be protected from cuts, instead targeting their children and grandchildren (who aren’t thinking about retirement yet) for even smaller benefits.

 Many GOP Candidates – Same Social Security & Medicare Approach
  • Senator Ted Cruz supports privatizing Social Security, turning Medicare into “Coupon Care”, raising the retirement age and Medicare eligibility age, and cutting Cost of Living Allowances (COLAs).  Each of these proposals would cut benefits well below the current $1,200 average monthly benefit
  •  Senator Rand Paul has called Social Security a Ponzi scheme and supports allowing people to opt out of the program.  He also supports raising the retirement age and Medicare eligibility age, Social Security privatization, and raising seniors’ Medicare premiums and copayments.
  • Senator Marco Rubio supports privatizing Social Security, raising the retirement age and cutting Cost of Living Allowances (COLAs).  He considers current benefits “generous” and supports the GOP/Ryan budget which turns Medicare into “Coupon Care”.

None of these candidates have expressed support for lifting the payroll tax cap so that wealthy Americans pay the same rate as everyone else or proposals addressing income adequacy for millions of beneficiaries of all ages.

Now, that would be a true act of political courage.

 

 

Support for Expanding Social Security Grows & Right-Wingers Panic

This week has seen a wave of attacks by conservative columnists and think-tankers outraged that the call to Boost Social Security benefits is gaining traction on Capitol Hill (it’s already widely supported by Americans of all political persuasions nationwide). The shifting political tide was most recently apparent when an amendment to expand Social Security benefits was introduced by Senators Elizabeth Warren and Joe Manchin and supported by the majority of Senate Democrats.  That Congressional support mobilized a host of anti-Social Security writers, with libertarian Ann Ryand fan Megan McArdle leading the pack, to pen feverish anti-Social Security tomes.  Each of them following the same conservative talking points portraying Social Security as welfare, seniors as “greedy geezers” and demanding benefit cuts to pay for billionaire tax cuts they consider off-limits for reform. 

NCPSSM’s Equal Time details McArdle’s Bloomberg piece:    

The Left Gets It Wrong About Social Security

Megan McArdle, Columnist

McArdle’s disdain for Social Security is sprinkled throughout her error-laden story.  Here are just a few samples (emphasis is ours):

 

“no one, left or right, really wants to take on our vast army of retirees...”

 

“progressives who are ideologically opposed to shrinking the welfare state...”

 

“It is supremely irrelevant whether that money flows through the "trust fund" or Uncle Sam holds an annual ceremony in which the trustees are handed one of those giant checks they present to lottery winners...”

 

“Social Security's great political strength is the perception that beneficiaries have earned their benefits...”

 

 “The only reason that the system isn't in the red already is the net interest the government is paying itself on the bonds in the trust fund.” 

 

 

As a columnist, McArdle is paid to express her opinions.  However, as an employee of a “news organization” she should be expected to at least build her case based on facts.  As the Los Angeles Times correctly assessed, “It's rare to find so much sophistry, misunderstanding and misinformation about Social Security in one place.”  So much so, we can’t even begin to fact-check all of it; however, we’ll address the first four quotes listed above as classic examples of how conservatives consistently choose language describing Social Security as if it’s a “welfare state” where “vast army of retirees” are lucky enough to be “handed...giant checks” like lottery winners.  After all, it’s only a “perception that beneficiaries have earned their benefits.” Of course, the truth for millions of Americans who have actually worked and paid into Social Security for a lifetime (not just “perceived” that they did) does not resemble the political and verbal mythology created by conservatives like McArdle in any way. 

 

The claim that Social Security’s financing is actually worse than it appears because of some sort of accounting gimmick by which “the government is paying itself” shows either complete  ignorance of how the Trust Fund works or willful misrepresentation of the facts.  Simply put, the federal government pays interest on the money it borrows from American workers’ payroll tax contributions to Social Security.  That’s not the same as “paying itself.”  It’s a legal obligation we owe to all bond holders.  We also do this for the bonds in Warren Buffett and Pete Peterson’s portfolios, so why do conservatives never treat that as somehow suspect?  While defaulting on our debt to Pete Peterson or China would never be allowed (nor should it)...refusing to pay back America’s retirees is not only acceptable to conservatives but exactly the solution alleged “fiscal hawks” want Congress to adopt. 

Apparently, just one attack on the Boost Social Security movement wasn’t enough so Bloomberg posted a second piece, written by National Review’s Ramesh Ponnuru on the very next day (followed by yet another McArdle article later that afternoon).  Sensing the panic here?

Here’s Richard Eskow’s Huffington Post analysis of Ponnuru’s version of the anti-Social Security playbook:

“...we're taken on a wild ride that includes misperceptions about the financing of social insurance, the mischaracterization of Social Security as an anti-poverty program, and the citation of a methodologically flawed study from the American Enterprise Institute which incorrectly ascribes all sorts of economic evils - including "reducing work, saving, and even birth rates" - to Social Security.

But then, the anti-Social Security crowd has been playing by the same rules for decades: Ignore the needs and wishes of the majority, mislead the public about the fiscal facts and your opponents' arguments, and stigmatize the elderly (a cohort which most of us will eventually join) as a morally flawed "special interest."

Not content to let Bloomberg News have all the fun, the Washington Post’s editorial board piled on today adding yet another “cut Social Security” oped to their long list of similar screeds, claiming support of the Boost movement is just “pandering to seniors.”

“Of course, there’s nothing particularly original about the progressives’ campaign, either politically or policy-wise. Pandering to the elderly may be especially urgent for Democrats now, given that the formerly reliably blue 65-and-older set has evolved into a Republican constituency in the past decade, according to Gallup . But buying votes with Social Security promises is a hoary ploy whose master practitioner was none other than President Richard M. Nixon.”

The Post then goes on to claim there is no retirement crisis, the rich can’t afford to be taxed so much and seniors are actually doing quite well, thank you very much.  According to the Washington Post, supporting Social Security means you’re pandering to seniors (conveniently ignoring the fact that millions of children and people with disabilities of all ages also receive benefits).  But why doesn’t the Washington Post ever describe those opposed to cutting even a penny from trillions of dollars in tax expenditures for corporations as pandering to the 1%? 

Why?  Because that’s definitely not in the anti-Social Security playbook. 

Congress Targets Social Security with Fast-Track Commission Plan

"Reps. Tom Cole (R-OK) and John Delaney (D-MD) plan to introduce a bill this Congress that would create a Social Security commission to propose changes to the program, Cole's office confirmed to TPM on Monday." - Talking Points Memo.

“The commission would probably gradually raise retirement age, it would probably look at chained CPI, would probably look at means-testing and probably look at some sort of revenue, or reduce benefits for upper-income people,” Cole said. “Then you have to vote.”  - The Hill.

 “We are troubled that H.R. 1578 takes several steps to circumvent a deliberative public process, limiting the participation of Social Security stakeholders and advocates. For example, the Committees of jurisdiction over the Social Security program — the Senate Committee on Finance and the House Committee on Ways and Means — would have limited input in the development of the Commission’s recommendations. Under “fast track” procedural rules in your bill, the legislation embodying the Commission’s recommendations would be considered by Congress on an expedited, “take-it-or-leave-it” basis.  No amendments to the Commission’s bill could be offered and it could be passed in both the House and Senate by a simple majority vote. Normally, Section 310(g) of the Budget Act and the Senate’s “Byrd rule” require 60 votes in the Senate to approve legislation which changes Social Security." - Max Richtman.

 


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