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From the monthly archives: September 2007

We are pleased to present below all posts archived in 'September 2007'. If you still can't find what you are looking for, try using the search box.

What Part of “No” Don’t they Understand?

Make no mistake about it...the Bush administration clearly understands the value of a well structured and financed public relations campaign. Yesterday’s release of the first in a series of Treasury department “issue briefs”, signals the start of another run at defining Social Security reform in a way that best suits this administration’s ultimate goals...the creation of private accounts and massive benefit cuts. What the White House doesn’t seem to get is that sometimes even the best PR and Marketing strategy can’t sell misguided policy goals.

Here’s our analysis of this first Treasury brief entitled "Social Security Reform: The Nature of the Problem".

The Brief overstates the problem repeatedly by using the discredited “infinite horizon” calculation. The American Academy of Actuaries, the leading professional organization of actuaries, has warned that infinite-horizon projections “provide little if any useful information about the program's long-term finances and indeed are likely to mislead anyone lacking technical expertise in the demographic, economic, and actuarial aspects of the program's finances into believing that the program is in far worse financial shape than is actually indicated”.

Focuses on Benefit Cuts. Treasury Secretary Paulson says that Social Security can only be fixed by raising taxes or cutting benefits, yet he is focusing on benefit cuts.

Issue Brief Introduction: “Social Security can be made permanently solvent only by reducing the present value of scheduled benefits and/or increasing the present value of scheduled tax revenues.”

Secretary Paulson’s Statement : “While differences over personal accounts and taxes dominate the public debate over this issue, in my conversations I found that there are many other things on which people agree.”

Statement from the White House: The Associated Press reports, “But White House officials stressed that President Bush remains opposed to raising taxes."

So, while the Administration says tax increases and/or benefit cuts are the only solutions, they again propose only benefit cuts as the solution. To suggest that there are only “differences over personal accounts and taxes” (implying people agree on the need for benefit cuts) does not reflect the political reality.

Resurrects Privatization. The report makes it clear the Administration is interested in resurrecting privatization. However, rather than addressing it directly, the report uses “prefunding” as the code-word for privatization.

Issue Brief Statement: “Fairness to Future Generations Requires True Pre-Funding” and “Only if pre-funding is ‘real’ can this goal of fairness be achieved.

This is the setup to Social Security privatization. Remember when the White House renamed private accounts as “personal” accounts? The American people still understood this was the privatization of Social Security and they rejected it. The new buzz-word (for the same thing) appears to be “pre-funding”. Changing the terminology doesn’t change the fact that the political goals remain the same.

The Administration is merely resurrecting its arguments for privatization and laying the groundwork for President Bush’s plan for so-called progressive price-indexing of Social Security benefits, a plan which would cut benefits drastically affecting 70 percent of future retirees.

Bet He Won’t Be Invited Back...

CBO Director Peter Orszag offered insurers some advice yesterday they probably didn’t want to hear. He told attendees at the American Health Insurance Plans conference on Medicare that insurers should present data showing what is working in Medicare’s overpaid and highly subsidized private Advantage plans.

Private insurers have been promising for decades they could provide cheaper and more efficient coverage for seniors than Medicare. But they’re currently charging Medicare $1,000 more a year to cover a beneficiary in a private plan than it would cost to provide care to that same beneficiary under traditional Medicare. So far, private insurers can’t (or won’t) show us what we’re actually getting for that subsidy. Here’s Congress Daily’s coverage:

CBO has determined through a review that disease management programs mightreduce some healthcare costs, but the savings are offset by the costs of preventative measures, such as screening. "I know a lot of private practitioners have a different view, and I would say, show us the data," Orszag said at an American Health Insurance Plans conference on Medicare...Because the
interventions are not backed up by evidence,they drive up cost without improving health or outcomes," Orszag said.

MedPac’s estimates, that in the case of Private Fee-For-Service plans, only about half of these excess payments are used to deliver extra benefits for enrollees. The rest finances administrative costs, marketing, and profits. This is the elephant in the AHIP conference room Orszag had the courage to acknowledge.

Don’t forget that CBO has also said we could save $54 billion over the next five years and $149 billion over the next ten years if we just paid private plans the same rate as Medicare. Not only would eliminating these large overpayments save billions of dollars, it would also add two years of solvency to Medicare’s trust fund.

A "Must-Watch" Debate for Seniors & Their Families

For 90 minutes last night 5 Democratic Presidential candidates focused on the issues nearest and dearest to our and retirement security and healthcare.

If you missed this debate last night (and we understand some may already be suffering from presidential campaign fatigue...just 15 months out no less) this is one worth watching even after the fact.

Kaiser has a very good coverage roundup here and Iowa Public Television has the video.

Bookmark it and make this one a must-watch. These issues will affect all of our lives for decades to come.

We Don't Need an Entitlement Task Force

by Barbara B. Kennelly, President/CEO

Here’s a letter I sent to Congress today urging members to reject efforts to turn over their legislative responsibilities regarding entitlement spending and tax reform to a new Budget Task Force. As a former Congresswoman, I understand how tough these issues can be for our elected leaders. But I just don’t believe our process is so broken that Congressional committees should be sidelined in a debate on issues which touch virtually every American family in such critical ways. Here is the full text of my letter:

This week the Chairman and Ranking Member of the Senate Budget Committee renewed their plan to create a task force to write comprehensive entitlement and federal tax legislation.Under the plan, jurisdiction for long-term changes to Social Security, Medicare, Medicaid, and federal taxes would be handed over to a 16-member task force, divided equally between the majority and minority party. We understand Rep. Jim Cooper and Rep. Frank Wolf will introduce companion legislation in the House.

We appreciate the effort that both Senator Conrad and Senator Gregg have invested in their proposal. Despite their good intentions, however, we believe this plan contains many of the fatal flaws that have tainted similar bills over the years.

Social Security and Medicare are critical lifelines for America’s seniors.
Seniors deserve to have changes to these programs receive substantive consideration by Members of the Committees who best understand their intricacies. Major changes to these programs also deserve to be considered by Congress under a normal, open legislative process. The Conrad/Gregg plan would bypass these important protections. If it is adopted, America’s seniors will be the big losers.

For these reasons, the National Committee to Preserve Social Security and Medicare strongly opposes this measure.

Social Security Privatization Will Again Threaten America’s seniors.
The President and many of his supporters in Congress have made it clear that they favor privatizing Social Security. Despite strong public opposition, they continue to press for diverting money out of the Social Security Trust Fund and into private investment accounts.

Despite the expressed opposition to private accounts by the current majority Congressional leadership, establishment of this task force would give supporters of privatization a new forum in which to resurrect privatization. In addition, it offers privatizers a voice and a vote significantly disproportionate to their representation in Congress.

In effect, while the Task Force appears to be structured in a neutral manner, in fact it will create a platform for those who support the privatization of Social Security which might not be available to them through an open legislative process.

Legislative Jurisdiction over Social Security, Medicare, Medicaid and Federal Taxes Will Be Handed to the Task Force. Major restructuring of Social Security, Medicare and Medicaid has never been attempted in a single piece of legislation, and for good reason: these programs encompass significantly different economic issues and touch virtually every facet of American life. Under the Conrad/Gregg proposal, their future, as well as the construction of our entire system of federal taxation,would be placed in the hands of a group of only 16 people who may or may not have significant experience in the breadth of issues they encompass. Congressional Committees of jurisdiction, which have cultivated detailed knowledge of the programs and the needs of their beneficiaries over decades of hearings and education, would be relegated to being bystanders in the process.

We recognize the perspective of those who believe Social Security, Medicare and Medicaid should all be treated as one, with a focus on their long-term budgetary impact. However, we strongly believe this approach is both inappropriate and counterproductive. While these programs are entitlement programs, they have little else in common, yet they would be treated under a single legislative umbrella.

Social Security and Medicare are distinct programs and need to be addressed separately.
Contrary to popular rhetoric, Social Security’s funding gap is both modest and manageable. This gap is caused by a combination of demographics and the changing nature of income in our economy. Achieving Social Security solvency requires neither privatization nor deep cuts in benefits. If privatization were permanently and affirmatively rejected as part of the discussion, there is no reason to believe the Committees of jurisdiction could not devise a suitable plan to strengthen both the program and its long-term finances.

Medicare, on the other hand, is a health care program and most of its cost increase is being driven by the cost of overall health care, not demographics. As you know, solutions for our nation’s health care problems are elusive because they are extremely complex, and can hardly be expected to be resolved by a budget-oriented Task Force. In the absence of this type of comprehensive health care reform, any changes to Medicare standing in isolation are likely to simply shift costs onto the elderly.

The American People Will Be Left Out of the Discussion.Under the Conrad/Gregg proposal,a working group of current members of Congress and representatives of the current Administration would meet during 2008 and design the legislation that would address all of the long-term funding issues affecting Social Security, Medicare and Medicaid. The Task Force’s recommendations would be issued on December 9, 2008. The legislation would then be forced through Congress under extremely short timelines with no opportunity for amendments.

This would result in legislation written by a group which is not representative of the composition of the current Congress and may be even less representative of the Congress elected in 2008. More importantly, the American people will elect a new President in the fall of 2008. The legislation written by the working group would be forced upon a President who may have been elected by the American people on a platform at odds with the legislation offered by the working group. As a result, the voice of the American electorate would be diluted.

The Conrad/Gregg proposal runs counter to the intent of our Founding Fathers that actions by Congress reflect the will of the people they represent. Creating restrictive timelines and prohibiting amendments to push through changes of this importance to millions of Americans, especially senior Americans, ultimately disenfranchises voters and hurts the political process. While we agree with the goal of strengthening Social Security and Medicare, we strongly disagree with the process created by the Conrad/Gregg bill.


Barbara B. Kennelly, President/CEO


Not surprisingly, the insurance industry’s million dollar ad and lobbying campaign is paying off on Capitol Hill and it appears a Congressional compromise to re-authorize SCHIP won’t include needed reforms to Medicare.

Congress Daily summarizes the closed-door negotiations and Speaker Pelosi’s comments afterwards:

House Speaker Pelosi said “We are working on agreements between [the] House and Senate to take two proposals to our respective caucuses in order to see where we go from here." House leadership sources speculated she was referring to breaking the House measure into separate Medicare and SCHIP bills to avoid confronting the Senate with the House Medicare funding language, which Senate negotiators have called a poison pill.

Of course, the President promises a veto of anything other than his proposal anyway so that’s no small part of the political calculations here.

Both the Medicare overpayments to private plans and the doctor’s fix appear destined for “to be determined later” status. The Health Care Policy and Marketplace Review’s latest posts on this can be found here and here.

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