January 27, 2021
The Honorable Joseph R. Biden
The White House
Washington, D.C. 20500
Dear President Biden:
The National Committee to Preserve Social Security and Medicare is a membership organization whose mission is to protect, preserve, promote, and ensure the financial security, health, and the well-being of current and future generations of maturing Americans. With millions of members and supporters across America, we are the nation’s second-largest grassroots citizens organization devoted to the retirement future of all citizens. On behalf of our members and supporters, we extend our heartiest congratulations to you and Vice President Kamala Harris on your election victory and inauguration.
As you well know, Social Security and Medicare provide seniors with crucial financial and health security. Seniors’ earned benefits are “sacred obligations” with origins in Franklin D. Roosevelt’s New Deal and Lyndon B. Johnson’s Great Society and War on Poverty.
Medicare helps prevent poverty and promotes greater access to health care for nearly 60 million people 65 years of age and older and people with disabilities. Even though half of all Medicare beneficiaries in 2020 had incomes below $29,650, Medicare households spent over two times more than the average American household on out-of-pocket health care costs. Older Americans should not have to choose between paying for health care, food or utilities. We are pleased that you agree Medicare benefits must be improved, not cut. Medicare’s long-term solvency must be strengthened, and access to health care providers and benefits must be enhanced and preserved.
National Committee members share your strong opposition to privatizing Social Security, subjecting it to various “means-testing” schemes or reducing or eliminating the payroll tax, which is Social Security’s dedicated source of funding. Any of these drastic changes to the program would change Social Security’s universal nature, put at risk individuals’ income in retirement and undermine the program’s key role as the bedrock of American retirement.
In addition to preserving Social Security’s structure, we strongly support your plan to expand Social Security benefits, lifting an additional half a million seniors out of poverty by 2030. This includes your proposals to:
Provide a higher benefit for the oldest Americans:
- Americans at advanced ages are more likely to be financially vulnerable, even with Social Security, as they are less likely to be able to work and more likely to have depleted other retirement savings than younger retirees. We support enhancing their financial security by increasing benefits for all beneficiaries twenty years after they first become eligible for Social Security by a uniform amount equal to five percent of the average retired worker benefit in the prior year. This would be particularly helpful to women because they live longer than men and are more likely to outlive their retirement savings.
Increase the Special Minimum Benefit:
- Social Security is especially important to workers who spend most of their working lives in low-wage jobs. The Special Minimum Benefit was intended to help these workers so they wouldn’t face poverty in retirement but its value has deteriorated over time to the point of ineffectiveness. We support setting the Special Minimum Benefit at a floor of 150 percent of the federal poverty line.
Protect widows and widowers:
- Seniors living alone are often forced into poverty because of benefit reductions stemming from the death of a spouse. Widows and widowers from low-earning or wealth-depleted households are particularly at risk of poverty. The National Committee believes providing surviving spouses with 75 percent of the couple’s combined benefit would treat one-earner and two-earner couples more fairly and would reduce the likelihood of leaving the survivor in poverty.
- Other provisions that would address problems for surviving spouses include equalizing the rules for disabled widows and widowers by eliminating the current actuarial reduction that applies only to these beneficiaries, and providing equal benefits for working surviving spouses by eliminating any early retirement reduction inherited from a deceased spouse.
Provide caregiver credits:
- We applaud the improvements directed toward caregivers in the Biden Plan and are especially gratified that you have not forgotten the important role Social Security can play in providing a secure retirement for those who spend many years out of the workforce caring for dependent family members. The National Committee supports your proposal to provide imputed earnings to caregivers equal to 50 percent of that year’s average wage for up to ten years spent providing care to certain dependent family members when calculating an individual’s Social Security benefit.
Eliminate penalties for teachers and other public-sector workers:
- The Government Pension Offset (GPO) and the Windfall Elimination Provision (WEP) were intended to prevent those who spend their careers in a combination of Social Security-covered and non-covered employment from excessively benefitting from the progressive nature of Social Security’s benefit structure. In the real world, however, these provisions have deprived federal, state and local government retirees of the full Social Security benefits they earned during their working years and have hurt women and low-wage workers the most. We applaud your support for their repeal, or at a minimum, ensuring that their harsh impacts are mitigated.
We strongly support these provisions in the Biden Plan and believe they would provide a solid foundation upon which Social Security improvements could be built. As you are considering how to best help American workers and their families, however, we urge you to support the following additional improvements to Social Security:
Strengthen the Cost-of-Living Adjustment (COLA):
- One of Social Security’s strengths is that it includes annual Cost-of-Living Adjustments (COLAs) that are intended to help beneficiaries keep up with increases in the cost of living over decades in retirement. Unfortunately, the current formula does not fully take into account the spending patterns of older Americans, who are more likely to purchase goods and services related to health care than younger, urban workers. Adopting a fully-developed Consumer Price Index for the Elderly (CPI-E) would more accurately measure the effects of inflation on these older Americans and help them better keep pace with the skyrocketing costs of health care.
Improve the basic benefit for all:
- After years of operating under a COLA that does not reflect seniors’ spending patterns, Social Security’s basic benefit has been eroded. This is especially a problem for women who have worked a lifetime with low pay and are more financially vulnerable in retirement as they are less likely to have pensions or discretionary income that would allow for saving. We propose an increase to the basic benefit of all current and future beneficiaries by 5 percent of the average benefit (approximately $70 per month).
Restore student benefits:
- In the past, Social Security provided benefits to children attending post-secondary school full-time until age 22 if a working parent had died, become disabled or retired. This benefit was instrumental in helping many children of middle-class families stay in school after the loss of a parents’ income. Restoring the benefit would also help those parents who otherwise must defer saving for their own retirement because they are assisting their children with college or vocational school expenses.
Raise the threshold at which benefits are taxed:
- Since 1983, Social Security benefits over fixed thresholds have been subject to federal income tax. This was designed to raise revenue, but also to provide tax treatment analogous to private pensions. Congress acknowledged the uniqueness of Social Security as the bedrock of workers’ retirement security by ensuring that only higher-income beneficiaries would be subject to the tax. The thresholds were set at levels that would only impact about the top ten percent of retirees, but as they were never indexed, about one out of every two seniors today pay this tax. The thresholds should be raised so that middle-income seniors are no longer subject to federal income taxation on their Social Security benefits.
Protect Social Security benefits from garnishment:
- From its beginning, the Social Security Act provided strong protections against loss of retirement income through the garnishment or attachment of Social Security benefits for the purpose of recovering federal debts owed by retirees. This provided near iron-clad protection against impoverishment in old age due to debt collection. This historic protection was subsequently removed and we urge you to support its restoration.
Support program improvements:
- The Social Security Administration has as its mission providing superior customer service to millions of working Americans and their families. This mission has been eroded by the actions of the Trump Administration over the past four years, and we urge you to take immediate actions to reverse this deterioration. The rapid replacement of political appointees who do not share your commitment to Social Security must be followed by ensuring that the Agency has sufficient funds to fully address the needs of the American people. In addition, we urge you to:
- Reverse the regulations and policies that have undermined the disability adjudication process.
- Improve the procedures used in selecting and hiring Administrative Law Judges.
- Restore the production and delivery of Social Security statements.
- Halt the widespread office closures that are impairing the Agency’s ability to serve the public.
- Improve services associated with filings for benefits, including ensuring that adequate advice is given to beneficiaries making challenging financial decisions.
Fix the COVID Notch:
We also want to bring to your attention an unintended and unanticipated consequence of the pandemic that will result in deep cuts in Social Security benefits for over 3 million Americans who turned 60 in 2020.
As a result of the devastating impact COVID-19 has inflicted on the nation’s economy, aggregate wages are expected to be substantially lower in 2020 than they were in 2019. According to the Chief Actuary of Social Security, this will result in a sharp reduction in benefits for everyone born in 1960 compared to the benefits received by people born just one year earlier creating an effect known as a “notch”. The benefit cut to these workers is through no fault of their own and completely unrelated to the benefits they earned through their working lives. It is instead the consequence of the recession that has caused 42 million workers to lose their jobs or become furloughed due to the pandemic. The lower calculations for their initial benefit levels will follow these workers through their entire lifetime, providing significantly lower benefits for the rest of their lives.
Congress could correct this problem by ensuring that the Average Wage Index as used to calculate benefits never drops below the previous year’s level, a change similar to the current-law floor for the Cost-of-Living Adjustment, which cannot go negative. Corrective legislation should also avoid any benefit cuts compared to current law, protecting potential small increases in future benefit levels for everyone under age 60 who worked at any point in 2020, impacts that are also the consequence of the artificially low wage index resulting from the pandemic. These proposals would eliminate the “notch” and ensure that a new one is not created inadvertently. We urge you to support their enactment.
Ensure Social Security solvency:
Finally, we strongly support your commitment to ensuring the long-term solvency of Social Security without cutting benefits for current or future retirees and their families. We applaud your proposal to ensure that high-wage Americans pay the same taxes on those earnings that middle-class families pay by reinstating the payroll tax for higher wage levels. We believe you can maintain your commitment not to raise taxes on individuals earning under $400,000 a year and still generate needed revenue for America’s future retirees.
We also urge you to consider supporting small, incremental increases to the payroll tax rate stretched out over long periods of time for individuals with annual income over $400,000. We believe it is fair that well off Americans pay a little more into Social Security in order to help guarantee that full benefits for all can be paid well into the future.
We understand that these measures alone will be insufficient to offset the improvements to Social Security that the American people deserve while at the same time ensuring Social Security’s long-term solvency. We look forward to working with you and Congress to find additional revenue that meets these goals while fulfilling and strengthening Social Security’s “sacred obligations”.
Address the pandemic public health emergency:
- We strongly support many of the Biden Plan’s proposals to address the COVID-19 public health emergency including:
- Use the Defense Production Act to ramp up production of masks, face shields, and other Personal Protective Equipment (PPE).
- Invest $25 billion in a vaccine manufacturing and distribution plan that will guarantee it gets to every American, cost-free.
- Prevent price gouging for COVID-19 vaccines and therapies.
- Double drive-through testing sites.
- Invest in next-generation testing, including at home tests and instant tests.
- Create a Pandemic Testing Board modeled after President Franklin Roosevelt’s War Production Board.
Increase the federal payment to state Medicaid programs, including home- and community-based services:
- Boost the share of federal Medicaid funding known as the Federal Medical Assistance Percentage (FMAP) to a total of 14 percent through the end of the public health emergency.
- Increase FMAP for home- and community-based services (HCBS). We appreciate your significant, long-term investments in home- and community-based care. We would further ask for an immediate dedicated boost to Medicaid home- and community-based (HCBS) care for the duration of the pandemic or until such time a permanent HCBS program with an enhanced match is created. Specifically, we support increasing the federal payments to state Medicaid programs by an additional 10 percentage points through the end of the public health emergency to support activities that strengthen state HCBS benefits.
Bolster Medicare and Medicaid with your proposals to:
- Protect Medicaid from proposals to block grant the program. Efforts to block grant Medicaid, cap Medicaid payments on a per-beneficiary basis (per capita caps) and/or repeal the ACA’s Medicaid expansion should be opposed. These policies financially hurt states and lead to state Medicaid programs cutting services, quality and eligibility for the most vulnerable of our senior population.
- Make a $450 billion investment in expanding home- and community-based services so that seniors and individuals can stay in their homes if they want rather than go to a nursing home. The National Committee supports the Biden Plan’s elimination of the current waitlist for existing Medicaid home-and community-based services. We also support the creation of a new state plan option with an enhanced federal match to expand access to these services.
- Lower Medicare prescription drug prices. We urge you to support legislation to lift the prohibition on price negotiations with pharmaceutical manufacturers and create incentives to compel drug makers to negotiate with the Medicare program as proposed in the House-passed Elijah Cummings Lower Drug Costs Now Act. This bill would set limits on what drug prices could be based on an index of prices in other countries. Under the Lower Drug Costs Now Act, manufacturers that fail to comply with the negotiation process could be assessed an excise tax.
Reduce overall drug prices with your proposals to:
- Limit price increases for all brand, biotech, and abusively priced generic drugs to general inflation as a condition of participation in the Medicare program and public option.
- Limit launch prices for high-priced specialty drugs that have no competition and “are being abusively priced by manufacturers.”
- Improve access to generics by limiting gaming. The National Committee supports proposals to prevent brand manufacturers’ gaming the system to limit generic competition such as ending pay-for-delay deals and ensuring generic manufacturers’ access to enough samples of brand drugs to be able to get products approved for marketing.
- Reduce biologics exclusivity from 12 to 7 years, which would help lower pharmaceutical costs. Under current law, brand-name biologic manufacturers receive a 12-year exclusivity period for these drugs. Lowering the period of exclusivity to seven years and prohibiting additional periods of exclusivity for brand-name biologics due to minor changes in product formulations could result in improved consumer access to safe and effective biosimilar drugs. This is estimated to save Medicare $4.5 billion over 10 years.
- Eliminate the Part D Low-Income Subsidy (LIS) asset test. The amount of LIS assistance depends on beneficiaries’ income and assets. In 2020, income was limited to $19,140 and assets to $14,610 annually (including burial costs) for an individual. The LIS asset test should be eliminated because it punishes low-income seniors who have accumulated modest savings for retirement.
Improve Medicare coverage and access to the program:
- Provide vision, dental and hearing coverage. Medicare does not pay for routine dental care and dentures, routine vision care or eyeglasses or hearing exams and hearing aids, all services of great importance to many older people and that contribute to their high out-of-pocket health care costs. Medicare benefits should be expanded to cover vision, dental and hearing health services and equipment because they are important for healthy aging.
- Add a catastrophic out-of-pocket cap on spending. There are various deductibles and copayments for Medicare-covered services. The Part A hospital insurance deductible and other cost-sharing are quite high. Medicare does not have a limit on annual out-of-pocket spending like most large-employer plans and the Federal Employees Health Benefits Program (FEHBP). A version of this approach – Medicare Essential – would provide a new government-administered plan with a comprehensive benefit package as an alternative to traditional Medicare and Medicare Advantage. It would combine Medicare’s hospital, physician and prescription drug coverage into an integrated benefit with an annual limit on out-of-pocket expenses for covered benefits.
- Permanently count observation days toward meeting the three-day rule. Medicare beneficiaries have been denied access to Medicare’s skilled nursing facility (SNF) benefit when acute-care hospitals classify their patients as outpatients receiving observation services, rather than admitting them as inpatients. Under the Medicare statute, patients must have an inpatient hospital stay of three or more consecutive days, not counting the day of discharge, to meet Medicare criteria for coverage of post-acute care in a SNF. As a result, although the care received by patients in observation status is indistinguishable from the care received by inpatients, outpatients in observation who need follow-up care in a SNF will not qualify for Medicare coverage. Fortunately, the Center for Medicare and Medicaid Services waived this requirement for the duration of the COVID-19 public health emergency. That’s why, before the pandemic waiver expires, Congress must pass legislation to count hospital observation days toward meeting the three-day rule.
- Eliminate the 24-Month Waiting Period for Medicare Coverage for Disabled Individuals. Individuals receiving Social Security Disability Insurance benefits are likely to need medical care and should become eligible for Medicare when they start receiving Social Security.
- Improve Medicare Supplemental Insurance (Medigap). Medicare coverage gaps should be filled so that supplemental private Medigap plans are no longer needed. But until that happens, we urge you to support legislation to require plans to guarantee issue to individuals with disabilities or to any beneficiaries outside of specified enrollment periods and extend the right to guaranteed issue to all individuals who leave private Medicare Advantage (MA) plans regardless of when they make the switch to traditional Medicare.
- End the bias toward Medicare Advantage during open enrollment. The Trump Administration’s Centers for Medicare and Medicaid Services (CMS) actively undermined the traditional Medicare program during the 2018, 2019 and 2020 open enrollment campaigns by providing incomplete and biased information on Medicare Advantage (MA) to beneficiaries. The National Committee hopes to work with you to ensure that older Americans and people with disabilities receive better and unbiased information to make more informed decisions about their health care coverage options.
Improve the Affordable Care Act with your proposals to:
- Increase the value of premium tax credits to make coverage more affordable by lowering the cap on premium expenses to 8.5 percent of a person’s income. This will disproportionately help older individuals who fall right above the 400 percent of federal poverty level cutoff for subsidies because their insurance is age rated and thus more expensive.
- Create a Medicare-like public option for people to purchase on the ACA marketplaces.
- Calculate premium subsidies based on gold plan-level benefits allowing people to purchase more generous coverage.
- Provide coverage through the public option to those who live in states that did not expand Medicaid who would otherwise be eligible for Medicaid.
On behalf of the millions of members and supporters of the National Committee to Preserve Social Security and Medicare, we applaud your long history of protecting and enhancing Social Security, Medicare and Medicaid, which form the bedrock of retirement and health security for American seniors. We stand with you and look forward to working with you to defend our nation’s sacred trust for todays’ workers and for future generations.
President and CEO