March 19, 2013
United States House of Representatives
Washington, D.C. 20515
On behalf of the millions of members and supporters of the National Committee to Preserve Social Security and Medicare, I urge you to oppose H. Con. Res. 25, the House Fiscal Year 2014 Budget Resolution, when it is considered by the House of Representatives this week. This budget, introduced by House Committee on the Budget Chairman Paul Ryan, would be devastating to today’s seniors and future retirees, people with disabilities, spouses, survivors and children due to the proposed changes it makes to Medicare, Medicaid and other programs. While it proposes to make huge cuts to the social insurance safety net, the Ryan budget would give massive tax cuts to the very wealthy (without explaining how to make them deficit-neutral).
The Ryan budget plan privatizes Medicare and achieves savings by shifting costs to Medicare beneficiaries. Beginning in 2024, when people become eligible for Medicare, they would not enroll in the current program which provides guaranteed benefits. Rather, they would receive a voucher, also referred to as a premium support payment, to be used to purchase private health insurance or traditional Medicare through a Medicare Exchange. The annual growth in Medicare spending is limited to GDP + 0.5 percent, a rate likely to be lower than the growth in health costs in future years. This means beneficiaries would be subject to additional out-of-pocket costs because the amount the federal government provides for their voucher would be limited and they may not be able to afford a plan that includes their doctors.
The Ryan budget proposal calls for private plans to provide coverage that is at least actuarially equivalent to the benefit package provided by fee-for-service Medicare. This gives private companies an incentive to tailor their plans to attract the youngest and healthiest seniors, even if payments are “risk adjusted” to take health status into account, which would leave traditional Medicare with older and sicker beneficiaries. Their higher health costs would lead to higher premiums that beneficiaries would be unable or unwilling to pay, resulting in a death spiral for traditional Medicare. Consequently, those who are currently enrolled in traditional Medicare would be adversely affected by the premium support proposal, despite Chairman Ryan’s assertion that nothing will change for people 55 years of age and older.
In addition to privatizing Medicare, the Ryan budget would increase the age of eligibility for Medicare from 65 to 67 by increasing it two months per year from 2024 to 2035. In addition, Chairman Ryan’s budget calls for repealing provisions in the Affordable Care Act (ACA) which would make insurance available and more affordable for 65 and 66 year olds if they were no longer eligible for Medicare. Without the guarantees in the ACA, such as requiring insurance companies to cover people with pre-existing medical conditions and limiting age rating, it would be very difficult and expensive for older people who were no longer eligible for Medicare to purchase private insurance. Repealing the ACA would also take away improvements already in place for Medicare beneficiaries – closing the Medicare Part D prescription drug coverage gap known as the “donut hole,” providing preventive screenings and services without out-of-pocket costs, and offering annual wellness exams.
The Ryan budget plan includes reductions to Medicaid funding that would affect low-income seniors. Older adults and people with disabilities account for two-thirds of all Medicaid spending. The proposed changes to Medicaid, turning it into a block grant program to the states, would affect older Americans by jeopardizing the availability and quality of nursing home care as well as long-term services and supports in the community. Low-income seniors’ ability to receive assistance to help pay their Medicare out-of-pocket costs would also be impaired. The proposed block grants would cut federal Medicaid spending by $810 billion over the next 10 years (2014-2023). This is about a 21 percent reduction compared to present law.
Currently, the federal government guarantees matching funds to states for providing Medicaid services to eligible individuals, based on state per capita income, with less affluent states receiving a higher match. Under a block grant, it would be difficult for the federal government to allocate funds equitably across all states. In addition, Medicaid funding would not be responsive to changing program needs due to recessions and health care inflation. For beneficiaries, this means that states could limit coverage, tighten eligibility criteria and impose waiting lists. The end result is that safeguards in place would not be guaranteed and cost shifting to beneficiaries would likely occur, thus hurting the individuals who need help the most. The Ryan budget also would repeal Medicaid expansion under the ARA, leaving millions of Americans uninsured and underinsured.
The Ryan budget would require the President and the Congress “to submit a plan to shore up the Social Security Trust Fund.” The National Committee questions the assumptions made in Chairman Ryan’s “Pathway to Prosperity” that the only way to resolve Social Security’s solvency is through unpopular benefit cuts. Social Security does not face an immediate crisis and is not driving either the short-term deficit or long-term debt. We believe Social Security should be strengthened for the long-term by increasing the current cap on earnings. Moreover, a discussion about the future of Social Security should not be limited to the single purpose of resolving the solvency of the program. In our country, more than half of all workers have no access to retirement plans at work and millions reach retirement age without enough private savings to live on. The present and growing retirement crisis means that we should be strengthening Social Security, not cutting benefits. That is why any review of the program’s solvency must also address whether Social Security benefits are adequate to protect Americans from slipping into poverty.
The National Committee urges you to oppose H. Con. Res. 25, which would be extremely harmful to seniors, people with disabilities, spouses, survivors and children. We look forward to working with you on proposals to strengthen Medicare and Medicaid that do not shift burdensome health care costs to beneficiaries, as well as proposals to provide adequate funding for programs critical to the retirement and health security of middle- and lower-income Americans.
President and CEO