On February 12, 2018, President Trump submitted his Fiscal Year (FY) 2019 budget recommendations to Congress. This budget would drastically cut programs that benefit America’s oldest — including many vulnerable — citizens. The President’s spending plan calls for deep reductions to Social Security Disability Insurance, breaking his promise not to touch Social Security. It also includes cuts in Medicare, another program he promised not to touch.
By gutting Medicaid, it jeopardizes access to the long-term care covered by the program — violating another of President Trump’s campaign pledges. Other programs that feed needy and isolated seniors, keep them warm in their homes and help them navigate the complexities of Medicare are eliminated or slashed. This paper summarizes some of the key proposals affecting seniors.
President Trump’s budget for FY 2019 proposes to cut up to $64 billion from Social Security Disability Insurance (SSDI) benefits through demonstrations ostensibly geared toward helping disability beneficiaries to stay at work or return to work. Since 1980, the Social Security Administration (SSA) has initiated eight demonstrations to promote return to work, none having more than a modest effect on beneficiaries’ workforce participation. Still, the Trump budget envisions demonstrations that would lead to a five percent cut in SSDI benefits by 2027. Reductions of this magnitude would have to be enforced through punitive work requirements or other harsh measures that slash benefits or cut off eligibility entirely. Demonstrations are one thing. Using them to disguise massive benefit cuts is unconscionable.
The President’s budget calls for a broad array of other benefit cuts for seniors with disabilities, including:
- Limiting the retroactivity of applications for disability benefits from 12 months to six months (This proposal would cut SSDI benefits by an average of $7,000 for beneficiaries affected by this change);
- Denial of unemployment compensation payments to certain SSDI beneficiaries (This proposal would affect SSDI beneficiaries who work but get laid off – and as a result — qualify for Unemployment Insurance.); and
- Unreasonably capping the amount payable to individuals who receive Supplemental Security Income (SSI) while living with other SSI recipients (Average SSI benefits are $555 per month or $18.50 per day. The maximum SSI payment is $750 a month, which is 75 percent of the federal poverty guideline for a single person. Under this proposal, if SSI recipients lived together – including families – their benefits could be reduced beyond what is reasonable.).
In total, these harmful provisions would produce “savings” in Social Security programs that equal a whopping $72 billion over 10 years. These “savings” are cuts plain and simple. We call on President Trump to return to the commitment he made with the American people when he ran for election last fall, promising to keep his hands off Social Security rather than using it as a piggy bank to help pay for tax cuts for the wealthy.
- The President proposes $12.393 billion for SSA’s FY 2019 appropriation for administrative funding. This is a decrease of $89 million over FY 2017 actual spending, resulting in longer waits for decisions on initial disability claims and time to speak to a representative from SSA’s 800 number. With 10,000 baby boomers reaching age 65 every day, SSA needs substantial yearly increases just to keep pace with increased workloads. This level of funding falls short of covering new costs incurred by SSA due to annual inflation and increases in employee compensation. America’s seniors will see no improvement in the level of service SSA provides in FY 2019.
President Trump’s FY 2019 budget proposal funds production and mailing of only 15 million Social Security statements. This proposal is part of SSA’s overall plan to limit sending statements only to individuals who are 60 or older rather than sending them to all workers every five years. The National Committee urges the Administration to develop plans to send these important financial planning documents to all workers, as is required in section 1143 of the Social Security Act.
While the President’s budget includes no proposals that directly affect Social Security cost-of-living adjustments, or COLAs, we are concerned about his recommendations that will affect COLAs earned by retired federal employees and postal workers. Specifically, these proposals would strip retirees and survivors who participate in the newer Federal Employees Retirement System of any COLA protection while reducing COLAs for annuitants in the older Civil Service Retirement System by 0.5 percentage points per year. All of America’s seniors deserve the protection COLAs provide against the ravages of inflation. That’s why the National Committee opposes tinkering with any retiree COLAs.
President Trump’s budget proposes over $500 billion in cuts to Medicare. Many of these savings come from cuts to Medicare providers and suppliers, which in turn could affect the care that is available to Medicare beneficiaries. Savings proposals in the President’s budget include:
- Establishing a uniform payment system for post-acute care providers – skilled nursing facilities, home health agencies, inpatient rehabilitation hospitals and long-term care hospitals, saving $80.2 billion over 10 years.
- Implementing a new system for Medicare payments to home health agencies, saving $16.7 billion over 10 years.
- Modifying Medicare payments to hospitals for uncompensated care, saving $69.5 billion over 10 years.
- Reducing Medicare payments to institutional providers from 65 percent to 25 percent of bad debts that are due to beneficiaries’ non-payment of deductibles and coinsurance, saving $37 billion over l0 years.
President Trump’s budget also includes policy changes to the prescription drug benefit that would impact Medicare’s spending and beneficiary costs. Changes to the Medicare Part D benefit include:
- Creating an out-of-pocket maximum for Part D. This would mean beneficiaries with very high drug costs would no longer have cost sharing responsibility once they hit the catastrophic threshold. This would add $7.4 billion in costs over 10 years.
- Changing the way the threshold for moving out of the coverage gap or “donut hole”” is calculated in a way that will make it more costly to seniors to move through it. Taken together with an out-of-pocket cap, it will mean savings for some seniors with very high drug costs, but costs will climb for a larger number of seniors. This saves $47.0 billion over 10 years.
- Eliminating cost-sharing on generic drugs for low-income beneficiaries, saving $210 million over 10 years.
Medicaid pays for about half of all long-term services and supports (LTSS) for older adults and people with disabilities. In FY 2015, federal and state governments spent about $158 billion or 30 percent of Medicaid spending on LTSS.
The President’s budget would slash funding for this vital program for seniors by changing the structure of the program into either a per capita cap or Medicaid block grant. Further, the proposed budget would allow states greater flexibility to manage their programs, allowing them to impose work requirements on Medicaid recipients for example. Through 2028, the president’s budget would cut roughly $1.4 trillion from the program through repealing the Affordable Care Act, restructuring the program and allowing more state flexibility.
Per capita caps limit federal funding for state Medicaid programs to an arbitrary per beneficiary funding level. Under “block grants,” states would receive a lump sum from the federal government to fund their Medicaid programs. Block grants and per capita caps would ultimately shift costs to states by eliminating the guarantee of additional federal funds if state costs increase because of underlying health care costs, demography or complexity of care. For example, as the baby boom generation nearly doubles the senior population, state Medicaid programs would be unable to keep up with demands for long-term services and supports.
Over time, states that lose money under per capita caps or block grants would have to make up the funding themselves, by cutting benefits and/or limiting eligibility, if federal funds do not keep up with their Medicaid population’s needs. Further, the President’s budget repeals the Affordable Care Act, including the Medicaid expansion and subsidized marketplaces, which provide coverage to near seniors. Repealing the expansion would cut the Medicaid program by over $300 billion over the next decade. States that expanded their Medicaid programs under the Affordable Care Act would be especially hard hit if the Medicaid expansion is eliminated or reduced as part of ACA repeal.
States could address their funding shortfalls in ways that would harm seniors and their families, including:
- Scaling back nursing home quality, service and safety protections.
- Requiring patients’ spouses, children or other family members to cover the cost of nursing home care, exhausting much or all of their savings.
- Tightening eligibility criteria for home and community-based services, resulting in more individuals moving into nursing homes.
- Limiting the number of people served.
Discretionary Programs Affecting Older Americans
The President’s budget includes reductions in funding, and in some cases complete elimination of funding, for programs of great importance to older Americans. The National Committee supports the modest increases included for Older Americans Act Supportive Services and Senior Centers, Congregate and Home-Delivered Nutrition Programs, and the National Family Caregiver Support Program. The National Committee is opposed to provisions affecting programs administered by the Department of Health and Human Services’ Administration for Community Living that:
- Reduce funding for Elder Rights Support Activities;
- Eliminate funding for Chronic Disease Self-Management Education and Falls Prevention;
- Eliminate funding for the State Health Insurance Assistance Program (SHIP), which provides Medicare beneficiaries with access to the only program that provides free, personalized, unbiased counseling on the growing complexities of Medicare coverage. Current funding is $47.1 million.
The National Committee also opposes budget proposals that:
- Eliminate the Older Americans Act Title V Senior Community Service Employment Program (SCSEP). SCSEP funding for FY 2017 is $400 million. The program provides job training to nearly 70,000 low-income older adults each year.
- Eliminate the Community Services Block Grant ($715 million), the Community Development Block Grant ($3 billion) and the Social Services Block Grant ($1.7 billion). Some Meals on Wheels programs rely on funding from these programs, in addition to OAA funding, to deliver nutritious meals to at-risk seniors.
- Eliminate funding for the Low-Income Home Energy Assistance Program (LIHEAP). LIHEAP funding for FY 2017 is $3.39 billion. Of the 6.8 million households that receive assistance with heating and cooling costs through LIHEAP each year, 2.26 million or one-third are age 60 or older.
- Eliminate funding for the Senior Corps programs, including the Retired and Senior Volunteer Program, Foster Grandparents and Senior Companions. Current Senior Corps funding at the FY 2017 level is $202.1 million. These programs enable seniors to remain active and engaged in their communities, serving neighbors across the lifespan, and benefitting their own health in the process. In 2016, 245,000 Senior Corps volunteers provided 74.6 million hours of service.
- Reduce funding for the National Institute on Aging at the National Institutes of Health (NIH) by $46 million, which will negatively impact research into cancer, Alzheimer’s, Parkinson’s and other diseases affecting older Americans.