V I E W P O I N T

THE PRESIDENT 'S FY 2012 BUDGET AND ITS EFFECT ON SENIORS

On February 14, 2011, President Obama submitted his Fiscal Year (FY) 2012 budget to the Congress. This budget proposes a total spending level of $3.7 trillion, and includes $1.1 trillion in budget reductions that require some tough choices. While we support the President's efforts to begin the process of ending an era of fiscal irresponsibility that began long before he entered the White House, we are pleased that there is nothing in this budget that reduces or targets Social Security beneficiaries or the Social Security program to help pay for years of deficit spending.

This gives those of us who advocate for Social Security additional time to alert those who support Social Security, and especially the membership of our organization, of the need to continue the fight to protect Social Security. As part of that fight, we plan work to inform more members of Congress that Social Security is not the cause of this budget crisis nor is it the solution.

The National Committee and its millions of members and supporters nationwide have been in the forefront of this battle. They have sent hundreds of thousands of petitions, emails, and phone calls to Congress and the White House reminding our elected officials that Social Security has not contributed to our national debt. We plan to continue to send this message to Washington as the budget debate continues.

By way of good news, seniors, who have gone two years without a COLA increase, will appreciate the $250 one-time economic recovery payment that has been included in the FY 2012 budget if it is approved by Congress. This assistance would be both timely and helpful.

This paper summarizes some of the key proposals affecting seniors in the President's FY 2012 budget. Additional information about Social Security and Medicare and the Older Americans Act is available on the National Committee's website
( www.ncpssm.org ) or by calling 1-800-966-1935.

The President's FY 2012 budget does not target Social Security as a means of reducing the deficit . In fact, the President, in the budget, acknowledges that Social Security does not face an immediate crisis and is not driving either the short-term deficit or long-term debt. We agree with the President and we also agree that Social Security should be strengthened for the long-term. We also believe that initiatives to improve and strengthen Social Security must be made based only on what is good for Social Security - not what's good for reducing the deficit.

The budget includes a number of legislative proposals that would strengthen the Social Security Administration's (SSA's) ability to administer the Social Security program. Among them are proposals to allow SSA to develop and test improvements to the disability insurance program and to improve services to disabled children. Others would provide SSA with access to data that would make program administration more efficient and reduce erroneous payments.

Administration of Social Security

High quality service from the Social Security Administration is vital to the interests of all of America's seniors, and the President recognizes this in his budget by calling for $12.5 billion for the administrative expenses of SSA in FY 2012. Whether they rely on face-to-face service from the agency's network of 1,300 local offices, its nationwide toll-free 800 number service, or the host of service options offered on the internet, prompt and reliable service is vital.

That's why we applaud the President's commitment to ensuring that seniors receive top-notch service from the SSA. The funding level proposed in the President's budget will allow the agency to pay for day-to-day operating expenses, address increasing retirement and disability workloads, focus on program integrity, and invest in technology. SSA will process over 4.6 million applications for retirement benefits in FY 2012, and administer $621 billion in benefit payments to over 45 million beneficiaries. The agency will also have funding to help reduce backlogs in disability applications and reduce the length of time people must wait for a decision.

Medicare and Medicaid

The President's budget provides funding for the Centers for Medicare and Medicaid Services (CMS) for implementing the provisions of the Affordable Care Act (ACA) that will strengthen Medicare and Medicaid. CMS is working to implement provisions, such as testing ways to provide better care to Medicare beneficiaries with multiple chronic conditions and reducing unnecessary hospital readmissions. These changes to the Medicare program are intended to improve the quality of care beneficiaries receive and to reward providers for efficient care. Changes such as these will go a long way toward reducing the growth in health are spending which will save money for Medicare beneficiaries and the federal government. Current projections from the Congressional Budget Office (CBO) are that the Affordable Care Act will save more than $200 billion over the next 10 years and reduce the deficit by more than $1 trillion in the following10 years.

The President's budget expands on initiatives in the Affordable Care Act (ACA) to prevent, detect and recover improper payments, including fraud, waste and abuse. The goal is to cut the Medicare fee-for-service error rate in half by 2012, which will help bolster the financial health of Medicare. The President's budget provides for $270 million in new funding for initiatives to fight fraud in Medicare, Medicaid and the Children's Health Insurance Program that are expected to generate savings of $32.3 billion over 10 years.

The President's budget includes funding to prevent a decrease in payments to physicians treating Medicare beneficiaries. Under the Sustainable Growth Rate (SGR) formula, reimbursements to physicians treating Medicare patients are scheduled to be reduced by nearly 30 percent at the end of 2011. The President's budget would prevent this cut in physician payments for the next two years, and would offset the cost with specific health care savings totaling $62 billion. During this two-year period, the Administration intends to work with Congress on a long-term change in physician payment rates - a so-called "doc fix" - that will improve quality and efficiency, provide predictable payments to providers and help ensure that Medicare beneficiaries continue to have access to their physicians.

We will be reviewing the health savings that are proposed to pay for maintaining adequate payments to physicians to determine their impact on the Medicare and Medicaid programs and to ensure that they do not increase costs to consumers or reduce benefits. We support the President's savings that come from promoting lower pharmaceutical costs by p roviding for faster development of generic versions of biologic drugs. The budget proposes shortening the period of exclusivity after FDA approval from 12 years to 7 years and prohibiting "pay-for-delay" agreements between brand name and generic pharmaceutical companies that delay entry of generic drugs into the market.

Medicaid 

The President's budget provides $495 million to extend the Qualified Individual (QI) Program through September 30, 2012 . The QI program, along with the other Medicare Savings Programs (MSP), helps pay out-of-pocket costs for Medicare beneficiaries with limited incomes. Under the budget proposal, states would receive 100 percent federal funding to pay the Medicare Part B premiums of low-income Medicare beneficiaries with incomes between 120 and 135 percent of the federal poverty level, which would save beneficiaries over $1000 annually.

Administration on Aging (AoA)

The President's budget includes $2.3 billion for the Administration on Aging, which administers the Older Americans Act programs , as well as other programs to support independent living for seniors. Although this budget request is $181 million below current funding (Fiscal Year 2010 levels), it includes both important increases in some programs and reductions in others, which are highlighted below.

Caregiver Initiative

The President's budget includes a $96 million Caregiver Initiative which is "an effort to expand help to families and seniors so that caregivers can better manage their multiple responsibilities and seniors can live in the community for as long as possible." The budget provides additional resources to several Older Americans Act programs - Home and Community-based Supportive Services is increased by $48 million, or 13 percent; the National Family Caregiver Support Program is increased by $38 million, or 25 percent; and the Native American Caregiver Support Program is increased by $2 million, a 31 percent increase. In addition, the Lifespan Respite Care Program, administered by AoA, receives a $7.5 million increase to $10 million.

Nutrition Programs

The President's budget provides level funding for both the congregate nutrition program, at $218 million, and the home-delivered meals program, at $441 million . This flat funding is expected to reduce the number of meals that are served which is unfortunate given the fact that there are already waiting lists for nutrition services.

Senior Community Service Employment Program (SCSEP)

The President's budget reduces funding for the Senior Community Service Employment Program (SCSEP) by $375 million, or 45 percent, and transfers it from the Department of Labor to the Administration on Aging. Older workers are experiencing very high unemployment rates and are more likely than any other age group to remain jobless for long periods of time. SCSEP is the only major jobs program targeted at older Americans with very limited incomes and is more important than ever during this time of high unemployment.

Community Living Assistance and Supports Program (CLASS)

The President's budget includes first-time funding for the Community Living Assistance and Supports Program (CLASS) which is being housed within AoA. The budget request of $120 million is to get the new long-term services and supports financing program, which begins collecting premiums in 2012, off the ground.

Low-Income Home Energy Assistance Program (LIHEAP )

The President's budget includes a nearly 50 percent, or $2.5 billion, cut in the Low-Income Home Energy Assistance Program (LIHEAP) saying that our nation is no longer in a period of steep increases in energy prices . However, many older adults, individuals with disabilities and low-income families receiving LIHEAP are struggling to meet basic needs. Forty percent of households receiving LIHEAP include an adult age 60 or older, and those seniors should not have to choose between buying food and medicine or paying for home energy.

Government Relations and Policy, February 2011