On February 10, 2020 President Trump submitted his Fiscal Year (FY) 2021 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, the president’s budget jeopardizes access to the long-term care covered by the program — violating another Trump campaign pledge. What’s more, the cuts to health care programs would help pay for a proposal in the budget that would make the December 2017 individual and estate tax cuts permanent. This regressive tax cut – made at the expense of the health security of millions of Americans – would increase the income of the top 1 percent of households by an average of $40,000 each year, according to the Center on Budget and Policy Priorities.
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 by the President’s budget. This paper summarizes some of the key proposals affecting seniors.
President Trump’s budget for FY 2021 proposes to cut billions from Social Security Disability Insurance (SSDI) benefits through demonstration projects ostensibly geared toward helping disability beneficiaries stay at work or return to work. Since 1980, the Social Security Administration (SSA) has initiated eight demonstration projects to promote return to work, none having more than a modest effect on beneficiaries’ workforce participation. 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 of up to 5 percent of total program participation 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 $7,500 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. The maximum SSI payment is $771 a month, about $25 per day, 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.
In total, these harmful provisions would produce “savings” in Social Security programs that equal a whopping $90 billion over 10 years. These “savings” are cuts plain and simple. We call on President Trump to return to the commitment he made to the American people when he ran for election in 2016, 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 $13.351 billion for SSA’s FY 2021 appropriation for administrative funding. This is an increase of $480 million over the FY 2019 enacted level, and a badly needed increase to address years of underfunding. It represents a first step in stabilizing SSA’s continued customer service deterioration. With 10,000 baby boomers reaching age 65 every day, SSA needs substantial yearly increases just to keep pace with increased workloads. Just last year, the National Committee proposed a $590 million funding increase over the President’s FY 2020 request. Although not enough to compensate for many years of funding shortfalls, the $13.351 billion called for in the President’s FY 2021 budget will enable SSA to improve 800 number telephone service and reduce the time disabled applicants must wait for a decision on their disability appeals.
President Trump’s FY 2021 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.
The President’s budget requests authority to charge a fee for issuing Social Security replacement cards. Under this scheme, the first card, usually issued at the time of an infant’s birth, would be free. Any subsequent request for a replacement card would cost as much as $25 if the request were made in a local Social Security field office or made in writing. If the request is made online the charge would be $7.00. We believe proposals to shift more of the cost of administering the Social Security program to participants is unjust and would be burdensome, especially for lower income workers. Indeed, workers already support the administration of the Social Security program through their payroll tax contributions. Imposing a fee for a replacement card is wrong, and the National Committee opposes this proposal.
While the president’s budget includes no proposals that directly affect Social Security cost-of-living adjustments (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 these measures. It would also create a precedent to make the same COLA cuts to Social Security beneficiaries.
President Trump’s budget proposes $479 billion in Medicare cost savings. Many of these savings are achieved by cutting payments to Medicare providers and suppliers, which in turn could affect the care that is available to Medicare beneficiaries. Reduction proposals in the president’s budget include:
- Pay on-campus hospital outpatient departments at the physician office rate for certain services saving $117.2 billion over 10 years.
- Establishing a unified payment system for post-acute providers based on patients’ clinical needs rather than site of care saving $101.5 billion over 10 years.
- Eliminating Medicare reimbursement for bad debt at disproportionate share eligible hospitals, exempting rural hospitals saving $33.6 billion in savings over 10 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 means beneficiaries with very high drug costs would no longer have cost sharing responsibility once they hit the catastrophic threshold.
- Reducing Medicare prescription drug spending by $135 billion over ten years. The budget does not explain how this cost savings would be achieved, but the amount is similar to the Congressional Budget Office’s estimate for S. 2543, the Prescription Drug Pricing Reduction Act of 2019, introduced by Senators Charles Grassley (R-IA) and Ron Wyden (D-OR) and approved by the Senate Finance Committee in July 2019. The Grassley-Wyden bill saves money by forcing pharmaceutical manufacturers to rebate money to Medicare if they raise their prices for drugs covered by Medicare Parts B and D faster than inflation. While the National Committee supports S. 2543, we prefer the more comprehensive drug pricing reforms in the House passed H.R. 3, the Elijah E. Cummings Lower Drug Costs Now Act, which allows Medicare to negotiate prices directly with drug manufacturers.
Medicaid pays for about half of all long-term services and supports (LTSS) for older adults and people with disabilities. In FY 2016, federal and state governments spent about $167 billion (or 30 percent of Medicaid spending) on LTSS.
The proposed budget would allow states greater flexibility to manage their programs, allowing them to impose work requirements on Medicaid recipients, for example. The president’s budget would cut roughly $1 trillion from the program through 2030 by repealing the Affordable Care Act, increasing barriers to eligibility, reducing fraud and abuse, increasing Medicaid recipients cost sharing and limiting the ways in which states can come up with their share of payments toward Medicaid financing.
Work requirements can be particularly onerous for older Americans who may have a difficult time finding work if they have been laid off or who may have stopped working because of poor health. Although these work proposals contain exceptions for people with disabilities, it can take up to two years to be granted Social Security Disability Insurance eligibility.
The administration is vague about what types of flexibility would be required. But past budgets and recent guidance to states suggest the Trump Administration supports funding the program through block grants or per capita caps.
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, by suggesting that the Affordable Care Act be repealed, the budget would eliminate the Medicaid expansion and subsidized marketplaces, which provide coverage to seniors not yet eligible for Medicare. 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.
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
For years, Older Americans Act (OAA) funding has not kept pace with inflation or the growing population eligible for services. This financial reality has made it increasingly difficult for the Aging Network to even maintain existing services, let alone meet escalating need and keep up with a growing population. In fact, stagnant or declining federal funding since 2010 has eroded the current capacity of the network to address the needs of older adults. It would require a 23 percent funding increase for OAA programs to simply restore the service capacity that has been lost since FY 2010.
That’s why the National Committee is disappointed that the president’s budget flat funds OAA Supportive Services and Senior Centers and Congregate and Home-Delivered Nutrition and Preventive Health.
We are opposed to provisions affecting programs administered by the Department of Health and Human Services’ Administration for Community Living that:
- Reduce funding by $34.9 million or 18.7 percent for the National Family Caregivers Support Program.
- Eliminate funding for Chronic Disease Self-Management Education and Falls Prevention;
- Reduce funding by $16 million or 30.7 percent for the State Health Insurance Assistance Program (SHIP), which provides Medicare beneficiaries with access to the only program that provides free, personalized and unbiased counseling on the growing complexities of Medicare coverage.
The National Committee also opposes proposals in the budget that:
- Eliminate the Older Americans Act Title V Senior Community Service Employment Program (SCSEP). SCSEP funding for FY 2020 is $405 million. The program provides job training to nearly 60,000 low-income older adults each year.
- Eliminate the Community Services Block Grant ($740 million), the Community Development Block Grant ($3.4 billion) and the Social Services Block Grant ($1.7 billion). Some Meals on Wheels programs rely on funding from these block grants, 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 2020 is $3.740 billion. Of the Approximately 7 million households that receive assistance with heating and cooling costs through LIHEAP each year, 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 2020 level is $211 million. These programs enable seniors to remain active and engaged in their communities, serving neighbors across all generations, and benefitting their own health in the process. In 2018, more than 220,000 Senior Corps volunteers provided 54 million hours of service.
- Reduce funding for the National Institute on Aging at the National Institutes of Health by $320 million or 9.9 percent, which will negatively impact research into cancer, Alzheimer’s, Parkinson’s and other diseases affecting older Americans.