GOP Budget Plan: Even More Cuts for Seniors in Medicare

2017-07-10T16:11:18+00:00May 4th, 2015|Budget, Disability, entitlement reform, Medicare|

In keeping with every GOP budget passed over many years, benefit cuts for average Americans and tax cuts for the wealthy rule the day.  The Senate this week will pass the Budget Conference Report (it only needs a majority, which the GOP now has) including massive benefit cuts for seniors in Medicare.  

National Committee policy staff has laid out what this Budget bill means for seniors in our letter to the Senate:  

The conference agreement would be devastating to today’s seniors and future retirees, people with disabilities and children due to the proposed changes it makes to Medicare, Medicaid and the Affordable Care Act.  While it proposes huge cuts to our social insurance safety net, the conference report would give massive tax cuts to the very wealthy.The conference agreement assumes the privatization of 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 traditional Medicare 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 amount of the voucher would be determined each year when private health insurance plans and traditional Medicare participate in a competitive bidding process.  Seniors choosing a plan costing more than the average amount determined through competitive bidding would be required to pay the difference between the voucher and the plan’s premium.  In some geographic areas, traditional Medicare could be more expensive.  This would make it harder for seniors, particularly lower-income beneficiaries, to choose their own doctors if their only affordable options are private plans that have limited provider networks.  Wealthier Medicare beneficiaries would be required to pay a greater share of their premiums than lower-income seniors.

The plan to end traditional Medicare requires private plans participating in the Medicare Exchange to offer insurance to all Medicare beneficiaries.  However, it is likely that plans could tailor their benefits to attract the youngest and healthiest seniors and still be at least actuarially equivalent to the benefit package provided by fee-for-service Medicare.  This would leave traditional Medicare with older and sicker beneficiaries.  Their higher health costs would lead to higher premiums that people would be unable or unwilling to pay, resulting in a death spiral for traditional Medicare.  This would adversely impact people age 55 and older, including people currently enrolled in traditional Medicare, despite the conference agreement’s assertion that nothing will change for them.

The conference report threatens to shift costs to Medicare beneficiaries.  S. Con. Res. 11 contains $431 billion over ten years in unnamed Medicare cuts.  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.  When coupled with requirements to shift costs to beneficiaries in the Medicare Access and CHIP Reauthorization Act of 2015 (P.L. 114-10), the unspecified Medicare benefit cuts included in the conference agreement would be burdensome to millions of seniors and people with disabilities.

In addition, the conference agreement calls for repealing provisions in the Affordable Care Act (ACA), which would make health insurance inaccessible for seniors age 64 and younger.  Without the guarantees in the ACA, such as requiring insurance companies to cover people with pre-existing medical conditions and to limit age rating, younger seniors may not be able to purchase or afford private health insurance.

Repealing the ACA would also take away improvements already in place for Medicare beneficiaries – closing the Medicare Part D coverage gap, known as the “donut hole”; providing preventive screenings and services without out-of-pocket costs; and providing annual wellness exams.  The Centers for Medicare and Medicaid Services recently reported that since the passage of the ACA, over 9.4 million Medicare beneficiaries in the Medicare Part D donut hole have saved $15 billion on their prescription drugs, an average of $1,595 per person.  An estimated 39 million people with Medicare took advantage of at least one preventive service with no cost sharing in 2014.

The agreement includes reductions to Medicaid funding that would affect low-income seniors.  Medicaid provides funding for health care to help the most vulnerable Americans, including low-income seniors, people with disabilities, children and some families.  The conference report would end the current joint federal/state financing partnership and replace it with fixed dollar amount block grants, giving states less money than they would receive under current law.  In exchange, states would have additional flexibility to design and manage their Medicaid programs.  The proposed block grants would cut federal Medicaid spending by $500 billion over the next 10 years.  Giving states greater flexibility in managing and designing their programs in no way compensates for the significant reductions that beneficiaries, including nursing home residents and their families, could face by turning Medicaid into block grants.

The conference report also would repeal the Medicaid expansion in the ACA. Beginning in 2014, states have had the option to receive federal funding to expand Medicaid coverage to uninsured adults with incomes up to 138 percent of the federal poverty level ($16,242 for an individual in 2015).  Over half of the states have expanded their Medicaid programs, and some others will likely participate in the future.  The conference agreement would hurt states and low-income individuals by repealing Medicaid expansion, taking away $900 billion from the program over 10 years.  Altogether, S. Con. Res. 11 cuts the Medicaid program by more than $1.4 trillion over 10 years, compared to current law.

Moreover, the conference agreement puts 11 million severely disabled Social Security Disability Insurance (SSDI) beneficiaries at risk of a 20 percent benefit cut next year by reaffirming a House rule requiring legislation to address the financing of the SSDI program be accompanied by revenue increases or much more likely benefit cuts.  That’s why the National Committee urges the Senate to reject the House’s SSDI recommendations in the conference report and instead make a modest reallocation of Social Security payroll taxes from the retirement trust fund to the Disability Insurance Trust Fund as has been done 11 times in the past on a bipartisan basis.

The National Committee urges you to oppose the Conference Report on the FY 2016 Budget Resolution, which would be harmful to seniors, people with disabilities and children.”