Published in Woonsocket Call on January 21, 2018

In early December, the GOP-controlled Senate passed by a partisan vote of 51 to 49 its sweeping tax rewrite, sending the $1.5 trillion tax package, detailed in a 492 page bill, to the Conference Committee to iron out the differences between the Senate and House bills. The House’s Tax Cuts and Jobs Act (H.R. 1), was passed by a 227-to-205 vote on November 16, 2017. Congress ultimately passed the Conference Committee’s revised tax bill, sending it to President Trump’s desk for signature. While the new tax law has a few positive provisions for seniors, aging groups predict a frontal assault by the GOP-controlled Congress and White House in 2018 to make cuts on Medicare, Medicaid, and Social Security to balance to ballooning federal deficit.

Just days before President Trump signed into law on December 22, 2017, the Tax Cuts and Jobs Act (P.L. 115-97), considered to be the biggest tax reform overhaul in over 30 years, AARP’s Chief Executive Officer, Jo Ann C. Jenkins, sent a letter to Congress raising the Washington, DC-based aging groups concerns with the law’s significant shortcomings as well as highlighting its impact “on the nation’s ability to fund critical priorities.”

Putting Medicare on the Chopping Block

In December 19 correspondence, Jenkins noted that AARP opposed the tax bill because of its negative impact on older adults. She expressed concern that there would be increased calls for greater spending cuts in Medicare, Medicaid and other domestic programs serving older Americans, with the tax legislation increasing the nation’s deficit by $1.5 trillion over the next ten years (with an unknown amount beyond 2027).

“Indeed, the non-partisan Congressional Budget Office (CBO) has confirmed that unless Congress takes action, the reconciliation legislation will result in automatic federal funding cuts of $136 billion in fiscal year 2018, $25 billion of which must come from Medicare,” said Jenkins. With the tax legislation’s repeal of Obamacare’s individual mandate, health care premiums would increase by 10 percent (with 64-year olds paying an average increase of $1,490) and there would be 13 million fewer Americans with health coverage, says Jenkins, citing a CBO’s analysis of the tax legislation.

However, AARP did appreciate that the Tax Cuts and Jobs Act retained the medical expense , deduction and restored the 7.5 percent income threshold for all tax filers for two years, said Jenkins, noting that “almost three-quarters of tax filers who claimed the medical expense deduction are age 50 or older and live with a chronic condition or illness, and seventy percent of filers who claimed this deduction have income below $75,000.”

Finally, Jenkins also said that the Tax Cuts and Jobs Act retained the additional standard deduction for those age 65 and older, as well as rejected proposals to make significant changes to the tax treatment of retirement contributions, which would have negatively affected the ability many tax filers to save for their retirement.

Targeting Social Security, Medicare, and Medicaid

Like Jenkins, the Washington, DC-based National Committee to Preserve Social Security and Medicare also sees Medicare, Medicaid and Social Security becoming more vulnerable to benefit cuts due to the huge $1.5 trillion increase in the public debt resulting from the enactment of the GOP’s tax law.

According to the NCPSSM’s Government Relations and Policy staff in a January 2018 policy brief, key supporters of the Tax Cuts and Jobs Act made it very clear that Medicare, Medicare and Social Security, would be targeted to balance the federal budget immediately after its approval. “For example, Senator Marco Rubio (R-FL) said that the tax bill is just the first step before “…instituting structural changes to Social Security and Medicare…” benefits to reduce the federal deficit. Similarly, House Speaker Paul Ryan (R-WI) said that “we’re going to have to get back next year [2018] at entitlement reform, which is how you tackle the debt and the deficit.” In other words, the majority leadership will seek cuts to Medicare, Medicaid and Social Security benefits as the next step to pay for the deficits this tax bill will create,’ NCPSSM’s policy brief.

In 2018, NCPSSM anticipates that the GOP-controlled Congress will seriously look at privatizing Medicare, raising the Medicare eligibility age, increasing beneficiary out-of-pocket costs, expand means testing of Medicare premiums, and block granting Medicaid, as a way to reducing the huge federal debt.

NCPSSM says that under the GOP’s Medicare privatization plan, when people become eligible for Medicare benefits they would not enroll in the current traditional Medicare program, which provides guaranteed benefits, but would receive a voucher to purchase private health insurance or traditional Medicare through a Medicare Exchange. The voucher’s amount would be determined annually when private health insurance plans and traditional Medicare participate in a competitive bidding process.

Medicare costs could also be cut by gradually increasing the eligibility age of Medicare to correspond with Social Security’s retirement age which is increasing from 65 to 67. Although this GOP strategy would initially save money, it would increase “system-wide health spending for everyone else,” warns NCPSSM.

NCPSSM says that “savings from redesigning the Medicare benefit [to reduce the federal deficit] by combining the Part A and Part B deductibles and making changes to supplemental insurance (Medigap) policies, would likely increase costs for people with Medigap policies.”

In 2018, the GOP Congress also might even consider expanding means-testing of Medicare premiums to reduce the federal deficit, says NCPSSM. “Expand income-related premiums under Medicare Parts B and D until 25 percent of beneficiaries are subject to these premiums [would reduce costs]. A Kaiser Family Foundation study found that this proposal would affect individuals with incomes equivalent to $45,600 for an individual and $91,300 for a couple in 2013,” says NCPSSM’s policy brief.

Medicaid provides funding for health care to low-income seniors, people with disabilities, children and some families. “We anticipate [GOP] proposals will be made that would end the current joint federal/state financing partnership and replace it with per capita caps (or a block grant, at state option) giving states less money than they would receive under current law,” says NCPSSM’s policy brief, noting that repealing the Medicaid expansion under Obama’s Affordable Care Act would prevent low-income adults from accessing health care services.

Concerns Over Fast-Track Reforming Social Security

Finally, NCPSSM’s policy brief warns that GOP lawmakers might push for a “fast-track” procedure that would lead to cutting social security benefits. This proposal would require the President to submit a plan to be considered in Congress under “expedited procedures” to reform Social Security if the Social Security Trustees determine the Trust Funds do not meet a 75-year actuarial balance. NCPSSM views this proposal “as a way that to circumvent public scrutiny of proposals to reduce Social Security programs.”

NCCPSSM also anticipates a GOP proposal to eliminate concurrent receipt of unemployment insurance and Social Security Disability Insurance (SSDI) for beneficiaries who work, get laid off and as a result qualifies for Unemployment Insurance.

Last month, the GOP-controlled Congress and White House enacted the largest tax reform bill. AARP, NCPSSM and other aging advocacy groups warn that Social Security, Medicare and Medicaid will be targeted by the GOP lawmakers to balance the tax reform law’s $1.5 billion costs. Older voters must now become politically active in protecting and strengthening these programs for both current beneficiaries and future generations” With the looming 2018 mid-term elections, may be Congress might just listen.