On February 2, 2015, President Obama submitted his Fiscal Year (FY) 2016 budget to Congress. For seniors, there is good news and bad news in some of the key proposals which are summarized below. In addition to the National Committee’s long-standing opposition to any benefit cuts, we will vigorously support proposals that enhance benefits, strengthen safety net programs and improve the quality of life for older Americans and their families. Some of the more significant proposals, including the National Committee’s positions, are detailed in our budget analysis.
Thanks to the tireless efforts of the National Committee and its members, the President’s FY 2016 budget does not include any Social Security proposals that would negatively impact benefits for current or future beneficiaries, including no changes in the manner in which cost-of-living adjustments (COLA) are determined. However, the possibility of a lower COLA still exists due to the President’s previous support for the chained CPI which the National Committee is concerned could be accepted in budget negotiations with Congress.
Responding to forecasts that the Disability Insurance (DI) Trust Fund may be depleted by late 2016, the President’s budget proposes to strengthen the financial condition of the DI Trust Fund by rebalancing existing payroll tax collections between it and the Old-Age and Survivors Insurance (OASI) Trust Fund. The proposed rebalancing will have no effect on the overall health of the OASI and DI Trust Funds on a combined basis. Moreover, the President states emphatically that the Administration will oppose any measures that privatize or weaken the Social Security system, even more good news for America’s seniors. The National Committee supports this proposal.
In addition, the President’s budget proposes to amend the Social Security Act to ensure that all lawfully married same-sex couples will be eligible to receive Social Security spousal benefits, regardless of where they live. The National Committee appreciates the Administration’s leadership on this important issue and supports its position..
$12.7 billion has been requested for the Social Security Administration’s (SSA) FY 2016 appropriation for administrative funding, a $1.02 billion increase over the 2015 enacted level in order for the Social Security Administration to invest in, and improve, customer service. As part of its new customer service modernization initiative to improve internet and in-person services at SSA, the National Committee encourages the Acting Commissioner to develop a plan to significantly increase the number of individuals who receive Social Security (Earnings) Statements annually, improve the ease with which seniors can access services from the agency by increasing office hours, and reduce the length of time individuals must wait to talk to an agent on SSA’s toll-free telephone system. We also encourage the Acting Commissioner to develop a more transparent process to address the issue of SSA field office closures.
The National Committee opposes proposals in the President’s budget which shift additional costs to Medicare beneficiaries. Over half of Medicare beneficiaries had incomes below $23,500 per year in 2013, and they are already paying 23 percent of their average Social Security check for Parts 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. The Administration’s view that seniors will make wiser choices about using health care services if they have to pay more of the cost has been clearly refuted through research that shows these additional costs could lead many seniors to forgo necessary care, which, in turn, could lead to more serious health conditions and higher costs.
The National Committee opposes these four proposals which are designed to save money in the Medicare program but significantly increase costs for future beneficiaries:
- A $25 increase in the Part B deductible in 2019, 2021, and 2023 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 $3.7 billion over 10 years.
- A home health copayment for new beneficiaries beginning in 2019. 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 $830 million over 10 years.
- A Part B premium surcharge for new beneficiaries who purchase comprehensive 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 2019. 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 $4.0 billion over 10 years.
- Expand means testing of Medicare Parts B and D premiums to the middle class. Beginning in 2019, the Administration proposes to restructure means-testing in Medicare Parts B and D by increasing the amount of income-related premiums, and maintaining 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 would affect individuals with incomes equivalent to $45,600 for an individual and $91,300 for a couple in 2014.[i] This proposal is estimated to save approximately $66.4 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:
- Building on provisions in the Affordable Care Act that will provide better care to Medicare beneficiaries and reform Medicare payments to physicians.
- Supporting initiatives to prevent, detect and recover improper payments, including fraud, waste and abuse.
- Allowing Medicare to receive the same rebates as Medicaid for brand name and generic drugs provided to beneficiaries who receive the Part D Low-Income Subsidy, beginning in 2017.
- Increasing manufacturer discounts for brand name drugs in Medicare Part D to 75 percent, effectively closing the coverage gap “donut hole” for brand name drugs in 2017, three years sooner than under current law.
- 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.
- Allowing the Secretary of Health and Human Services (HHS) to negotiate with manufacturers to determine drug prices under Part D for biologics and high-cost drugs eligible for placement on a plan’s specialty tier.
Medicaid pays for about 62 percent of all long-term services and supports and many older adults and people with disabilities depend on the program for their health care needs. The National Committee supports proposals in the President’s budget that would expand long-term services and supports provided to beneficiaries in their homes and communities. In addition, we support proposals that:
- Maintain funding for the Qualified Individual (QI) program and extend the program through 2016. The QI program pays 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; i.e. individuals with monthly incomes below $1,333 and couples with monthly incomes below $1,790, who also have limited resources.
- Provide the Secretary of Health and Human Services with the authority to integrate the appeals process for low-income individuals who are dually eligible for Medicare and Medicaid benefits. Streamlining the appeals process will reduce confusion for beneficiaries and administrative burden for states and providers.
Administration for Community Living/Older Americans Act
The President’s budget includes $2.10 billion for the Administration for Community Living (ACL), which administers Older Americans Act (OAA) programs as well as other programs to support independent living for seniors and people with disabilities. The ACL budget increases funding by approximately $138 million for OAA programs including senior nutrition programs; supportive services such as in-home assistance with daily activities, transportation services and adult day care; and respite for family caregivers.
Government Relations and Policy, February 2015
[i] Source: Kaiser Family Foundation.