On February 13, 2012, President Obama submitted his Fiscal Year (FY) 2013 budget to the Congress. This budget proposes a total spending level of $3.8 trillion in FY 2013, and includes $3.2 trillion in budget reductions during this period that require some tough choices. While we are pleased that there is nothing in this budget that reduces or targets Social Security beneficiaries or the Social Security program, we are disappointed that it recommends further shifting health care costs to current and future Medicare beneficiaries.
The Administration’s support of Social Security gives advocates for the program additional time to alert those who support Social Security, especially the membership of our organization, of the need to continue the fight to protect Social Security. As part of that fight, we plan to inform more members of Congress that the National Committee and its millions of members and supporters nationwide have been in the forefront of the effort to educate all Americans and especially Members of Congress that Social Security is not the cause of this budget crisis, nor is it the solution. Our members have sent hundreds of thousands of petitions, emails, and made 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 went two years without a COLA increase, appreciate the 3.6 percent increase they received for 2012 and can look forward to a projected 1.9 percent increase, or about $23 per month, in 2013. This is assistance that is both timely and helpful.
This paper summarizes some of the key proposals affecting seniors in the President’s FY 2013 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 2013 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 provide SSA with access to data that would make program administration more efficient and reduce erroneous payments.
Administration of Social Security
SSA’s Administrative Funding
Despite SSA’s enormous workloads and challenges, SSA’s FY 2013 appropriation for administrative funding has seen only a slight increase from 2012. The President’s budget request for SSA in FY 2013 is $11.76 billion, which is nearly $1 billion less than the agency’s modest recommendation of $12.622 billion. The National Committee is concerned that the President’s budget request will make it difficult for SSA to cope with the continued increase in demand for services and maintain the progress it has already made in providing satisfactory service delivery to senior citizens, people with disabilities and others who rely on Social Security.
Consequently, the agency will be forced to make hard choices as vital services will have to compete for limited resources. Most recently, these “hard choices” have included instituting a hiring freeze in most components and terminating most employee overtime. Although the budget request is lean, we are pleased that SSA has decided, if its budget request is fully funded, to resume mailing Social Security statements to all eligible workers over age 25. These annual earnings and benefits statements are vital to millions of workers who rely on them to properly prepare for a secure retirement. We call on the Congress to fund SSA at a level that allows them to fulfill this commitment.
The National Committee opposes proposals in the President’s budget which would shift additional costs to Medicare beneficiaries. Over half of Medicare beneficiaries have incomes below $22,500 per year, and they are already paying 27 percent of the average Social Security check for Part B and D cost-sharing in addition to paying for health services not covered by Medicare. Medicare beneficiaries with annual incomes over $85,000 for individuals and $170,000 for couples are paying higher income-related premiums. We are troubled by the Administration’s view that people will make wiser choices about using health care services if they have to pay more of the cost. Rather, we believe it is likely that these additional costs could lead many seniors to forego necessary care, which, in turn, could lead to more serious health conditions and higher costs down the road.
The President’s budget proposes to apply a $25 increase in the Part B deductible in 2017, 2019, and 2021 for new beneficiaries . This increase would be in addition to the current Medicare Part B deductible that beneficiaries pay which, along with general revenues, funds Part B physician and outpatient services. This proposal is estimated to save approximately $2 billion over 10 years.
The President’s budget proposes a home health copayment for new beneficiaries beginning in 2017. A $100 copayment per home health episode would be applicable for episodes with five or more visits not preceded by a hospital or other inpatient post-acute care stay. This proposal is estimated to save approximately $350 million over 10 years.
The President’s budget proposes a Part B Premium surcharge for new beneficiaries who purchase near first-dollar Medigap coverage . The surcharge would be equivalent to about 15 percent of the average Medigap premium (or about 30 percent of the Part B premium) for new beneficiaries who purchase Medigap policies with particularly low cost-sharing requirements, starting in 2017. Other Medigap plans would be exempt from this requirement while still providing beneficiaries options for protection against high out-of-pocket costs. This proposal is estimated to save approximately $2.5 billion over 10 years.
The President’s budget proposes to further increase income-related premiums under Medicare Parts B and D. Beginning in 2017, the Administra?tion proposes to increase means-testing in Medicare Parts B and D by 15 percent and maintain the income thresholds associated with income-related premiums until 25 percent of beneficiaries under Parts B and D are subject to these premiums. This proposal is estimated to save approximately $28 billion over 10 years.
The President’s budget includes numerous proposals to strengthen Medicare’s financing and improve the quality of care provided to beneficiaries. We support many of these proposals, including;
• Funding to implement provisions in the Affordable Care Act that will provide better care to Medicare beneficiaries;
• Supporting initiatives to prevent, detect and recover improper payments, including fraud, waste and abuse;
• Requiring drug manufactures to provide rebates for drugs used by Medicare beneficiaries dually-eligible for Medicaid; and
• Promoting lower pharmaceutical costs by providing for faster development of generic versions of biologic drugs, and prohibiting “pay-for-delay” agreements between brand name and generic pharmaceutical companies that delay entry of generic drugs into the market.
The President’s budget maintains funding for the Qualified Individual program at $695 million and extends the program through December 31, 2014 . The QI program pays for Medicare Part B premiums for qualified beneficiaries with limited income. Specifically, the QI program provides States 100 percent federal funding to pay the Medicare Part B premiums of low-income beneficiaries with incomes between the 120 and 135 percent of the federal poverty level. This would save eligible beneficiaries about $1,200 annually.
The President’s budget applies a Medicaid blended rate that could affect low-income seniors. Older adults and people with disabilities account for two-thirds of all Medicaid spending, and Medicaid pays for about 62 percent of all long-term services and supports. Currently, the federal government pays a portion of each State’s Medicaid costs for eligible individuals. The State’s federal match is based upon the State’s relative wealth, and States with more low-income people receive a higher federal match. The President wants to “blend” Medicaid rates with the rates received from the federal government for a health program for children. This blended rate would be specific to each State, and would automatically increase if a recession forces enrollment and State costs to rise, beginning in 2017. The National Committee is concerned that this could jeopardize the availability and quality of long-term care both in nursing homes and the community as well as low-income seniors’ ability to receive assistance through the Medicare Savings Programs, which helps pay for their Medicare out-of-pocket costs.
Administration on Aging (AoA)
The President’s budget includes just under $2 billion for the Administration on Aging, which administers the Older Americans Act programs , as well as other programs to support independent living for seniors. Funding for most Older Americans Act programs, which is already too low to meet current needs, is frozen at current levels; the increase over the current budget reflects the Administration’s proposal to transfer the Senior Community Service Employment Program (SCSEP) from the Department of Labor to the Administration on Aging.
Low-Income Home Energy Assistance Program (LIHEAP)
The President’s budget includes $3 billion for the Low-Income Home Energy Assistance Program, which is a decrease of $452 million over current funding. M any 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 2012
The National Committee is a nonprofit, nonpartisan organization that acts in the interests of its membership through advocacy, education, services, grassroots efforts and the leadership of the board of directors and professional staff. The work of the National Committee is directed toward developing a secure retirement for all Americans.