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Good News for Seniors in Medicare That You Won’t Hear About from Conservatives

In spite of years and years of doom-and-gloom predictions from conservatives that Obamacare will hurt Medicare, the facts just continue to tell another, very different story.  Earlier in the month the annual Medicare Trustees report showed how the ACA continues to extend the program’s solvency.  Now, the Congressional Budget Office has even more to say:

“You’re looking at the biggest story involving the federal budget and a crucial one for the future of the American economy. Every year for the last six years in a row, the Congressional Budget Office has reduced its estimate for how much the federal government will need to spend on Medicare in coming years. The latest reduction came in a report from the budget office on Wednesday morning.

The changes are big. The difference between the current estimate for Medicare’s 2019 budget and the estimate for the 2019 budget four years ago is about $95 billion. That sum is greater than the government is expected to spend that year on unemployment insurance, welfare and Amtrak — combined. It’s equal to about one-fifth of the expected Pentagon budget in 2019. Widely discussed policy changes, like raising the estate tax, would generate just a tiny fraction of the budget savings relative to the recent changes in Medicare’s spending estimates.”

Unfortunately, these fiscal facts will be ignored by those in Washington determined to cut Medicare benefits. Even though he’s on a nationwide book tour, Rep. Paul Ryan is doing everything possible to ignore talking about his plan which would turn Medicare into CouponCare while also repealing the ACA -- stealing years from Medicare’s solvency, eliminating free screenings for seniors, preserving massive subsidies for private insurers in Medicare Advantage and bringing back the costly prescription drug donut hole. 

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2014 Social Security & Medicare Trustees Report

Hold the Rhetoric, Pass the Truth on the 2014 Trustees Report

This year’s projections come as no surprise to anyone who understands how Social Security and Medicare work. In fact, historically, the solvency date for the Social Security Trust Fund has fluctuated from a depletion date as distant as 2048 in the 1988 report to as soon as 2029 predicted in 1994 and 1997. On Medicare, each year since passage of the Affordable Care Act, the Trustees have reported the program’s improving solvency, this year adding an additional four years until 2030.  We should build on that success and continue reducing the high cost of health care system-wide, not just in Medicare.

This year’s Trustees reports prove, once again, how successful and stable Social Security and Medicare continue to be for the American people and the federal government.”... Max Richtman, NCPSSM President/CEO

Here are some of the key points in the 2014 Trustees Report:

·         Trustees project Social Security will be able to pay full benefits until the year 2033.  After that, Social Security will still have sufficient revenue to pay 77% of benefits if no changes are made to the program.

·         Social Security remains well-funded. In 2014, as the economy continues to improve, Social Security’s total income is projected to exceed its expenses. In fact, the Trustees estimate that total annual income will exceed program obligations until 2019. 

·         Trustees project a Cost of Living Adjustment increase of about 1.5% in 2015.

·         The Trustees report there is now nearly $2.76 trillion in the Social Security Trust Fund, which is $32 billion more than last year and that it will continue to grow by payroll contributions and interest on the Trust Fund's assets.

With so little bad news to report in this 2014 Trustees report, critics have now shifted their attention to Social Security Disability Insurance (SSDI), which faces a more immediate challenge and requires Congress’ action for a reallocation.

·         Trustees project the Disability Trust fund will be depleted in 2016, the same year projected in last year’s report. This projected shortfall is not a surprise and Congress should reallocate income across the Social Security Trust Funds, as it has done 11 times before, to cover the anticipated shortfall.  Disability expenditures have increased primarily due to demographic trends.  When Congress took action in 1994 to address a shortfall in SSDI, it knew that it would have to take action again in 2015 or 2016. Unfortunately, some in Congress have politicized this anticipated shortfall and threatened to delay action in order to force cuts throughout the entire Social Security program.

On Medicare, the 2014 Trustees report shows slowing the growth of health care costs has improved Medicare’s Trust Fund.

·         Medicare solvency remains greatly improved thanks to passage of healthcare reform, with the program paying full benefits until 2030, four years later than the 2013 report. Health care spending has also grown much more slowly.

·         Medicare Part B premiums are not projected to increase in 2015. 

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Cutting Social Security & Medicare = Economic Patriotism?

If you had any doubt about just how stark the differences are between the Republican and Democratic approach to fixing our economy, these dueling letters between Treasury Secretary Jack Lew and GOP Senator Orrin Hatch should clear that up for you quickly.  At issue is the idea of “economic patriotism.”

First, some background...

There’s currently a loophole in our tax code that allows American companies to dodge paying taxes by renouncing their corporate citizenship, leaving operations here but claiming an overseas address. This legal tax dodge costs our nation billions of dollars each year.  

“The practice has become known as “inversion.” But what it really amounts to is desertion. And it could cost Americans tens of billions of dollars. There are 47 firms in the last decade that have exploited this loophole, according to new data compiled by the nonpartisan Congressional Research Service. But it’s a hot topic again because at least a dozen U.S. firms are currently considering taking advantage of it.”...Center for American Progress

The President’s 2015 budget would make it harder for firms to reap the benefits of being an American company while simultaneously dodging their tax obligations by requiring a minimum 50% foreign ownership to avoid U.S. taxes (it’s currently only 20%). This week, Lew sent a letter to Congress urging quick action (okay, try not to laugh...) to pass inversion legislation.

“Congress should enact legislation immediately...to shut down this abuse of our tax system. What we need as a nation is a new sense of economic patriotism, where we all rise and fall together.  We know that the American economy grows best when the middle class participates fully and when the economy grows from the middle out.  We should not be providing support for corporations that seek to shift their profits overseas to avoid paying their fair share of taxes.”

Sounds reasonable, right?  Not according to the ranking GOP member of the Senate Finance Committee who penned a testy letter in reply.  Not only does Senator Hatch reject the legislative fix offered by Senate Democrats to recoup the billions lost to corporate scofflaws he also redefines the idea of “economic patriotism” by shifting the target from known corporate tax dodgers to American families who depend on Social Security, Medicare, Medicaid and the Children’s Health Insurance Program:

“I must disagree with the administration's position that we should, in the short term, enact punitive, retroactive policies designed to force companies to remain domiciled in the United States.”

“My hope is that your definition of "economic patriotism" is not so narrow as to only include a particular business practice ... I hope that you share my view that "economic patriotism" includes a desire to fix the problems that are truly ailing our country and threatening the livelihoods of future generations. Non-partisan watchdogs and rating agencies have been issuing warnings about our ballooning national debt and runaway entitlements for years now. These issues represent the greatest threat to our fiscal and economic security...”

Welcome to Washington, where you’re an “economic patriot” if you turn a blind eye to corporate tax dodgers who owe this nation billions of dollars and instead take it from middle-class benefits paid for by average Americans , the truest patriots of all, who worked a lifetime building the economy that fuels those corporate profits to begin with. 

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Negotiating for Lower Drug Costs in Medicare Part D

USA Today has a must-read editorial supporting our position that Medicare should be allowed to negotiate with drug-makers for lower prescription drugs, just as the Veterans Affairs department currently does.

“Part D already costs about $80 billion a year and is on track to double by 2022 as benefits improve and Baby Boomers retire. For two reasons, a significant chunk of that money is wasted on overpayments to drug companies: When Part D began, millions of patients were shifted over from Medicaid, the state-federal program for low-income people that gets far lower drug prices than Medicare. Suddenly, the cost of providing drugs to the same people shot up. Congress barred Medicare from negotiating the way Medicaid and the Department of Veterans Affairs do with drug makers to get lower prices. Instead, lawmakers insisted the job be done by private insurance companies.”

The fact that Medicare is forbidden in the law that created Medicare Part D to negotiate lower prices is no accident.  The drug lobby worked hard to ensure Medicare wouldn’t be allowed to cut into the profits which would flow to big Pharma thanks to millions of new customers delivered to them by Part D.  Even some Republican House members (this was a GOP sponsored bill), including Rep. Walter Jones from North Carolina and Rep. Dan Burton from Indiana, were aghast at the whole process:

"The pharmaceutical lobbyists wrote the bill," says Jones. "The bill was over 1,000 pages. And it got to the members of the House that morning, and we voted for it at about 3 a.m. in the morning," remembers Jones.

Why did the vote finally take place at 3 a.m.?

"Well, I think a lot of the shenanigans that were going on that night, they didn't want on national television in primetime," according to Burton.

Unfortunately not much has changed since 2003.  Roll Call has this wrap-up of what drug companies spent during the last quarter alone on lobbying Congress:

Five pharmaceutical companies have reported million-dollar increases in their spending on lobbying the federal government during the first quarter of 2014. Pfizer Inc., Novartis, Johnson & Johnson Services, Bayer Corporation, and Merck & Company have each boosted their lobbying of the executive and legislative branches.

Here are the top pharmaceutical spenders in the first quarter of 2014:

Pharmaceutical Research & Manufacturers (PhRMA) $4,680,000 – up from $4,050,000 in 2013 Q4.

Pfizer Inc. $3,190,000 – up from $2,090,000.

Novartis $2,580,000 – up from $920,000.

Amgen USA Inc. $2,560,000 – up from $2,330,000.

Eli Lilly & Co. $2,086,000 – down from $2,430,000.

Johnson & Johnson Services $2,110,000 – up from $860,000.

Bayer – $2,040,000, up from $1,000,000.

Merck & Co. $2,000,000 – up from $820,000

These are the same companies which claim any attempts to rein in their overpayments in Medicare will kill their research and development of new drugs:

“The drug companies say they must impose higher prices in the U.S. to pay for research that enables them to innovate and develop new drugs that save our lives. But that’s not true. Half of the scientifically innovative drugs approved in the U.S. from 1998 to 2007 resulted from research at universities and biotech firms, not big drug companies, research shows. And despite their rhetoric, drug companies spend 19 times more on marketing than on research and development.”  Healthcare for America Now

Meanwhile, in their opposing USA Today editorial big Pharma also argues that people like Part D so it shouldn’t be changed and, by the way, prescription drugs help people stay healthy.

“Surveys show 90% or more of Part D enrollees are satisfied with their coverage and say it works well. The use of medicines under Part D also helps to reduce spending on other health care services in Medicare, a fact that was recently acknowledged by CBO.”

Of course, access to prescription drugs helps people stay healthy but what does that have to do with whether or not Medicare should be forced to overpay for those drugs? Naturally, seniors like Part D.  Why wouldn’t they when before its passage they had absolutely no drug coverage?  That doesn’t mean Americans support paying more than they, or the government, should in order to pad drug makers’ pockets.  

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Seniors and Poverty

The Kaiser Family Foundation has produced a wonderful new video, Old and Poor: America’s Forgotten.  It was debuted at this week’s Senate Special Committee on Aging hearing examining the war on poverty and seniors.  We consider this a must-watch, must-share video.


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