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The Truth about Social Security’s Math Really Does Matter – Even in Washington

We don’t usually share this is the kind of “inside baseball” Washington story here but today’s a little different...

For months, conservative think-tankers who undermine the value of Social Security, deny the existence of a national retirement crisis and the need to boost benefits have been banging their drum for benefit cuts especially hard.  Why?  Because a scarcely reported CBO report on Social Security replacement rates (now you see why we don’t usually share these kind of stories) claimed Americans received more in benefits than previously believed or reported by Social Security actuaries.

For those who make a living advocating for benefits cuts, like the American Enterprise Institute’s Andrew Biggs, the CBO report was a golden goose.  His columns in the Washington Post, Wall Street Journal, Forbes and more tweets than we can count proclaimed the retirement crisis is phony and not only are Americans receiving enough Social Security benefits, some receive more than they need.

Now, anyone who actually works with beneficiaries knows his claim doesn’t reflect the real-world.  Today apparently, the CBO agrees.  They’ve issued a statement that their December numbers were wrong...significantly so.  

“After questions were raised by outside analysts, we identified some errors in one part of our report, CBO’s 2015 Long-Term Projections for Social Security: Additional Information, which was released on December 16, 2015.

The errors occurred in CBO’s calculations of replacement rates—the ratio of Social Security recipients’ benefits to their past earnings. The estimates reported in December inadvertently included years with earnings below those intended amounts.

The corrected version shows substantially lower mean initial replacement rates for retired and disabled workers. For example, the corrected rate for retired workers born in the 1940s is 43 percent; the value CBO reported in December was 60 percent.”

Los Angeles Times columnist, Michael Hiltzik, has been covering this story including some conversations with 

AEI’s Biggs: 

“Via Twitter, he has now retracted the Forbes piece. He says retractions of the others are coming. [Update: Biggs says by emailthat he has sent a retraction to the Wall Street Journal. His Washington Post piece, however, didn't cite the original CBO figures directly.]

 Biggs told me by email that the CBO's recalculation "doesn't radically alter the way I view the adequacy of Social Security benefits or retirement saving." That's because he had argued for a different formula that he says still shows replacement rates close to the CBO's original figures.”

In other words, the facts won’t alter conservatives’ quest to cut benefits and if the formula being used doesn’t get the results they want, the CBO should just change the formula to fit the anti-Social Security crowd’s political frame. 

Welcome to Washington. 

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High RX Drug Prices Certainly Not News to Seniors

While Turing Pharmaceuticals Martin Shkreli’s decision to raise the cost of a drug 5,000% certainly got a lot of attention earlier this year, the fact that the high cost of prescription drugs in America continues to soar beyond the reach of many isn’t news to anyone who’s made a trip to the pharmacy lately.  In fact, a Kaiser Family Foundation poll found a large majority of the public (72%) view the cost of prescription drugs as unreasonable.

The federal Health and Human Services Department has signaled they’re looking for a way to curb rising prescription drug prices.  They need to do so because rising drug costs have now overtaken a long stretch of stable premiums.  In other words, while Medicare has successfully controlled premiums those successes are lost when seniors in Part D continue to face growing prescription costs. 

“Andy Slavitt, acting administrator for the Centers for Medicare and Medicaid Services, said his agency spent $140 billion on prescription drugs and that spending on medicines increased 13 percent in 2014 while overall health spending grew 5 percent.” ....HHS Airs Concerns About Rising Drug Prices, Congressional Quarterly

“Spending on medicines increased 13 percent in 2014, compared to 5 percent for health care overall, Slavitt said. It was the highest rate of drug spending growth since 2001.”...Obama administration sets stage for a debate on drug costs, Associated Press

One simple solution is to allow Medicare to negotiate prices for prescription drugs which could save the program and its beneficiaries billions of dollars.

“The law that established Medicare Part D explicitly prohibits the prescription drug program from negotiating lower drug costs for beneficiaries. The major pharmaceutical companies adamantly defend this rule, contending that the higher prices are necessary to support the industry’s investment in research and development. However, a comparison of the prices paid by Part D with those paid by the Department of Veterans Affairs (VA) and other agencies shows that Part D could save billions of dollars through the use of additional negotiation techniques. Our analysis finds that the VA attains drug prices that, on average, are 48 percent lower than Part D plan prices for the top 10 drugs covered by the program.” ...”Price Negotiation for the Medicare Drug Program: It is Time to Lower Costs for Seniors,” NCPSSM Issue Brief

It’s time to hold America’s drug makers accountable. 

“Heather Block, a breast cancer patient from Lewes, Delaware, told the forum that her costs have been so high she could face bankruptcy if she beats the odds against her advanced disease. ‘Innovation is meaningless if nobody can afford it,’ she said”... Associated Press

 

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Will Congress Put Budget $’s to Work for Average Americans?

Passing a budget in Washington these days is uglier than making sausage. The next step (now underway), when Congressional appropriators actually decide where to spend those budgeted dollars, may be even worse.

As a reminder, the 2016 budget deal passed last month was far from perfect; however, it did:

·         Prevent a 19% cut in Social Security Disability Insurance benefits that would have occurred in late 2016

·         Mitigate a 52% Medicare Part B premium increase for 30% of Medicare beneficiaries

·         Alleviate an increase in the Part B deductible for all beneficiaries, lowering it from a projected $223 to $167

The budget deal also provided for a roughly $33 billion increase in domestic programs. Many, like Older Americans Act programs, have been devastated by the sequester so loosening that budget noose should have been good news.

However, Congressional conservatives have very different ideas than Democrats of where those extra budget dollars should go. In a classic “guns vs. butter” battle, GOP appropriators propose less for domestic programs, like the Older Americans Act, and $8 billion more for the nondefense war account beyond the increase already requested by the President.  According to Congressional Quarterly:

“Connecticut Democrat Rosa DeLauro, ranking member of the House Labor-HHS-Education Appropriations Subcommittee, on Tuesday slammed the new, post-budget-deal allocation for the spending bill she helps oversee, which typically accounts for roughly one-third of all nondefense discretionary spending.

DeLauro said the revised discretionary allocation for Labor-HHS-Education is $5.2 billion above the fiscal 2015 enacted level (PL 113-235) of $156.76 billion, or roughly $161.69 billion. She said the bill should receive an increase of closer to $10 billion above the enacted level. The budget accord provided a roughly $33 billion increase to domestic programs above the sequester level, when a roughly $8 billion increase to the nondefense war account beyond the president’s request is included.

“I’m opposed to the allocation. The recent allocation is well below the percentage that Labor-H should have, given that Labor-H is 32 percent of the nondefense discretionary dollars,” DeLauro said.”

The Older Americans Act is the backbone of the nation’s home and community supports system, helping older adults age with independence and dignity by providing them with much-needed in-home support, meals, transportation, caregiver assistance and ombudsman programs to help protect residents in nursing homes.

The Leadership Council of Aging Organizations, chaired by NCPSSM, is mobilizing Americans to call their members of Congress and ask them to do more, not less, for the growing number of older Americans by protecting aging services and increasing funding for the Older Americans Act and Elder Justice programs. Our seniors are counting on them.

USE OUR LEGISLATIVE HOTLINE

AND MAKE YOUR CALL TO CONGRESS

(800) 998-0180

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Two New Reports on Private Medicare Advantage Plans Reveal Real Problems for Seniors

 According to a new Government Accountability Office (GAO) report private insurers who offer Medicare Advantage plans need tougher oversight. 

“Federal investigators have found Medicare officials rarely enforce rules for private insurance plans intended to make sure beneficiaries will be able to see a doctor when they need care.

The U.S. Centers for Medicare and Medicaid Services, which oversees Medicare Advantage, requires the plans to have doctors in sufficient numbers and specialties who are near enough — in distance and travel time — so seniors can reach them. 

But the GAO found CMS checked the provider networks of less than 1 percent of the plans since 2013 — serving just 2 percent of Medicare Advantage members — and only when the plans expanded to a new county.” ... Kaiser Health News & Conn. Health I-Team 

In 2013, United Healthcare, which is the nation’s biggest health insurance company and a provider of private Medicare Advantage in Connecticut, dropped hundreds of health care providers and 1,200 doctors.  Medicare Advantage beneficiaries are restricted to a network of providers. If their provider leaves, they cannot change plans during the year. What happened in Connecticut is the perfect example of how MA plans have been allowed to skirt the rules, dropping providers thereby limiting coverage for seniors with little warning and leaving them with few options. 

“The GAO report shows Medicare ‘was not verifying network adequacy. That’s their job and they abdicated that responsibility,’ said U.S. Rep. Rosa DeLauro, D-New Haven, who requested the investigation along with other members of the Connecticut congressional delegation.”

Also this week, a new Brown University study shows that once medical care becomes costly for seniors in Medicare Advantage and no longer meets their needs beneficiaries are leaving the private MA plans.

"Our results raise questions about whether current Medicare Advantage regulations and payment formulas are designed to meet the needs of Medicare Advantage members who use post-acute and long-term care," wrote Momotazur Rahman, assistant professor (research) of health services, policy and practice in the Brown University School of Public Health, and colleagues in the October issue of the journal Health Affairs. "The unidirectional flow of these high-risk and often high-spending patients from Medicare Advantage to traditional Medicare appears to transfer responsibility to traditional Medicare just as patients enter a period of intensive health care needs." 

Private Medicare Advantage plans continue to see growth as they promise gym-memberships, limited optometric coverage or zero premium plans.  However, as predicted by many healthcare experts and indicated in the Brown study, seniors find that once they actually need help with more costly care, MA plans aren’t providing the coverage they need. 

Ultimately, this means that younger and healthier seniors are being lured into private insurers’ plans only to have to switch to traditional Medicare once they need coverage for more serious health issues (and isn’t that why we have health insurance in the first place – to cover when we get sick, not when we’re healthy?).  Meanwhile, private insurance companies continue to reap the benefits of annual federal subsidies to provide this limited coverage for healthier seniors – which are tax dollars that could have been used in traditional Medicare to serve all beneficiaries. 

 

 

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Two New Reports on Private Medicare Advantage Plans Reveal Real Problems for Seniors

 According to a new Government Accountability Office (GAO) report private insurers who offer Medicare Advantage plans need tougher oversight. 

“Federal investigators have found Medicare officials rarely enforce rules for private insurance plans intended to make sure beneficiaries will be able to see a doctor when they need care.

The U.S. Centers for Medicare and Medicaid Services, which oversees Medicare Advantage, requires the plans to have doctors in sufficient numbers and specialties who are near enough — in distance and travel time — so seniors can reach them. 

But the GAO found CMS checked the provider networks of less than 1 percent of the plans since 2013 — serving just 2 percent of Medicare Advantage members — and only when the plans expanded to a new county.” ... Kaiser Health News & Conn. Health I-Team 

In 2013, United Healthcare, which is the nation’s biggest health insurance company and a provider of private Medicare Advantage in Connecticut, dropped hundreds of health care providers and 1,200 doctors.  Medicare Advantage beneficiaries are restricted to a network of providers. If their provider leaves, they cannot change plans during the year. What happened in Connecticut is the perfect example of how MA plans have been allowed to skirt the rules, dropping providers thereby limiting coverage for seniors with little warning and leaving them with few options. 

“The GAO report shows Medicare ‘was not verifying network adequacy. That’s their job and they abdicated that responsibility,’ said U.S. Rep. Rosa DeLauro, D-New Haven, who requested the investigation along with other members of the Connecticut congressional delegation.”

Also this week, a new Brown University study shows that once medical care becomes costly for seniors in Medicare Advantage and no longer meets their needs beneficiaries are leaving the private MA plans.

"Our results raise questions about whether current Medicare Advantage regulations and payment formulas are designed to meet the needs of Medicare Advantage members who use post-acute and long-term care," wrote Momotazur Rahman, assistant professor (research) of health services, policy and practice in the Brown University School of Public Health, and colleagues in the October issue of the journal Health Affairs. "The unidirectional flow of these high-risk and often high-spending patients from Medicare Advantage to traditional Medicare appears to transfer responsibility to traditional Medicare just as patients enter a period of intensive health care needs." 

Private Medicare Advantage plans continue to see growth as they promise gym-memberships, limited optometric coverage or zero premium plans.  However, as predicted by many healthcare experts and indicated in the Brown study, seniors find that once they actually need help with more costly care, MA plans aren’t providing the coverage they need. 

Ultimately, this means that younger and healthier seniors are being lured into private insurers’ plans only to have to switch to traditional Medicare once they need coverage for more serious health issues (and isn’t that why we have health insurance in the first place – to cover when we get sick, not when we’re healthy?).  Meanwhile, private insurance companies continue to reap the benefits of annual federal subsidies to provide this limited coverage for healthier seniors – which are tax dollars that could have been used in traditional Medicare to serve all beneficiaries. 

 

 

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