Jenkins: Working Senior’s Priming the Nation’s Economic Engine

Published in the Woonsocket Call on December 22, 2019

In recent years, Senate Majority Leader Mich McConnell of Kentucky, Sen. Marco Rubio of Florida and even former House Speaker Paul Ryan of Wisconsin, have warned that the growing number of seniors is fast becoming an economic drag to the nation’s economic growth, citing the spiraling costs of Social Security and Medicare. As the 2020 presidential election looms, GOP candidates are calling for reining in the skyrocketing federal budget deficit by slashing these popular domestic programs.

In 2015, President Donald Trump declared that he would not touch Social Security and Medicare. But now some GOP insiders are saying he may cut these programs during his second term, if he wins.

But after you read the newly released AARP report, The Longevity Economy Outlook, you may just want to consider these comments about seniors being a drain on the economy as false and misleading claims, just “fake news.”

AARP’s Longevity Economy Outlook report pulls from national data detailing how much people age 50 and older spend, earn working and pay in taxes.

Just days ago, AARP CEO Jo Ann Jenkins penned a blog article on the Washington, DC-based aging group’s website highlighting the findings of this major report. AARP’s top senior executive strongly disputes the myth that people age 50 and over are an economic drain on society. Rather the report’s findings indicate that older workers, who are getting a monthly Social Security check and receiving Medicare benefits, are priming the nation’s economic engine, she says.

“As the number of people over 50 grows, this cohort group is transforming America’s economic markets and sparking fresh ideas, and the demand for new products and services across our economy,” says Jenkins.

Jenkins notes that when older workers delay their retirement they continue to impact the economy by earning a paycheck, purchasing goods and services, and generating tax revenues for local, state and federal government.

“The economic activity of people 50-plus supports 88.6 million jobs in the U.S. generates $5.7 trillion in wages and salaries, and accounts for $2.1 trillion in combined taxes,” says Jenkins.

AARP’s economic impact study, released on Dec. 19, reports that people age 50 and older contribute a whopping $8.3 trillion to the U.S. economy, putting this age group just behind the U.S. (20.5 trillion) and China (13.4 trillion) when measured by gross domestic product. They also create an additional $745 billion in value through being unpaid family caregivers (see my commentary in the November 17/18 issues of the Woonsocket Call and Pawtucket Times).

Jenkins says, AARP ’s major report also projects the economic impact of older works to continue in the coming decades, tripling to more than $28 trillion by 2050 as younger generations (millennials and Generation Z) turn age 50 in 2031 and 2047, respectively.

With the graying of the nation’s population (predicted to be 157 million by 2050), the AARP report predicts that older persons will have more collective spending power, too, says Jenkins. “Fifty-six cents of every dollar spent in the United States in 2018 came from someone 50 or older,” she says, adding that by 2050 this amount is expected to jump to 61 cents of every dollar.

For over six years, AARP has been tracking the economic impact of older adults on the nation’s economy, Jenkins’ penned in her recently published blog article. It’s growing steadily over these years, she says.

“When AARP began researching the economic power of people 50 and older in 2013, we found that they generated $7.1 trillion in economic activity,” says Jenkins, noting that three years later it had grown to 7.5 trillion. “The 2019 report reflects an 11 percent growth in economic impact, a 6 percent growth in jobs created and a 12 percent growth in wages and salaries over the most recent three-year period,” adds Jenkins.

Older Rhode Islanders and the State’s Economy

By virtue of Rhode Island being one of the oldest states per capita in the country we have long been aware of the contribution and buying power older people contribute to the state’s economy,” said AARP Rhode Island State Director Kathleen Connell. “When you add in those 50-64 it becomes a big and powerful percentage of the population,” she says.

Over the years, Connell has observed more engagement with AARP in the younger end of the demographic spectrum because people in their 50s have justifiable concerns about their future. They wonder: “Will they outspend their savings? Will Social Security change in ways that will reduce their benefits? Will out-of-pocket prescription drug expenses sink the savings they hope to put away for retirement?,” she says.

“Waiting for retirement to think about these issues could well be too late,” warns Connell. “This is creating greater interest in government and politics and magnifies the importance of their vote,” she adds.

“At the same time, as older Rhode Islanders remain the workforce longer, they are keep paying taxes – a sizable plus for the state’s economy,” observes Connell. “With their extensive experience, many continue to be movers and shakers, innovators and professionals lending guidance that helps fuel economic growth,” she states.

Connell adds: “Outside the workplace, they are connected in new ways via technology and social media. The great thing is that across the range of 50 and older workers it can be said that more people are sharing the workplace adding to our cultural development and participating in civic engagement more than ever before.”

Wake Up Call to Businesses, Congress

AARP’s report should be a “wake-up call” to businesses and federal and state policymakers to rethink their attitudes, warns Jenkins in the concluding of her blog article. She calls on business leaders to “build strategies for marketing their products and services to older Americans and to embrace a multi-generational workforce.” Jenkins also urges Congress and state law makers to develop policies to support the growing number of uncompensated caregivers.

Herb Weiss, LRI’12, is a Pawtucket writer covering aging, health care and medical issues. To purchase “Taking Charge: Collected Stories on Aging Boldly,” a collection of 79 of his weekly commentaries, go to herbweiss.com.

House Committee Moves to Rein in Skyrocketing Prescription Drug Costs

Published in the Woonsocket Call on December 1, 2019

On Nov. 18, House Antitrust Subcommittee Chair David N. Cicilline (D-RI) and Judiciary Committee Chairman Jerrold Nadler (D-RI) introduced The Affordable Prescriptions for Patients Through Promoting Competition Act of 2019 (H.R. 5133) to put the brakes on skyrocketing prescription drug costs. The bill attacked increasing costs by prohibiting pharmaceutical companies from engaging in anticompetitive “product hopping.”

Two days later, the Committee unanimously passed the bipartisan bill to drive down the rising costs of prescription drugs. Now H.R. 5133 goes to the House floor for a vote.

“Big pharmaceutical companies have done everything they can to increase their profits regardless of who it affects. Their CEOs make millions in bonuses ever year while hardworking folks are forced to ration their medicine just so they can put food on the table for their kids,” said Cicilline, in a released statement announcing the introduction of the bill.

Since becoming Chair of the House Antitrust Subcommittee, Cicilline has sought to take on the anticompetitive behavior in the health care and pharmaceutical sectors. “This is wrong, and it needs to stop. This bill, along with the suite of legislation to lower health care costs the House has passed already this year, will put an end to anticompetitive behavior that is driving prices up while pushing the middle class further and further down,” says Cicilline in pushing for the bill’s passage.

“This bill builds on the Committee’s strong record of bipartisan legislation to confront one of the leading drivers of high prescription drug costs—efforts by drug companies to keep generic drugs off the market so that they can preserve their monopoly profits,” adds Chairman Nadler when H.R. 5133 was thrown into the legislative hopper. “The outrageous behavior of product hopping puts profits before patients and thwarts the competition that is essential to lowering prescription drug prices,” he charges. Nadler says that H.R. 5133 would “encourage drug companies to focus on delivering meaningful innovation for sick patients rather than delivering profits to their bottom line.”

Fixing the Problem

According to Cicilline and Nadler, pharmaceutical companies use a wide array of tactics when their patent on a drug is near expiration to switch patients to another version of the drug that they have the exclusive right to sell. Called “product hopping,” this anticompetitive practice extends the manufacturer’s ability to charge monopoly prices by blocking the patient’s ability to switch to a cheaper, generic alternative. Product hopping benefits the manufacturer’s bottom line at the expense of patients who are stuck paying higher prices often for many years at a time, they say.

The two Congressmen say that there is another roadblock to lowering prescription drug costs. Although antitrust agencies have made an effort to curb product hopping, the Federal Trade Commission (FTC) still faces a number of hurdles under existing law when trying to hold companies accountable for this anticompetitive conduct. The Affordable Prescriptions for Patients Through Promoting Competition Act of 2019 strengthens the FTC’s ability to bring and win cases against pharmaceutical companies that engage in all forms of product hopping.

A similar version of H.R. 5133 was considered in the Senate and it would save taxpayers an estimated $500 million according to the nonpartisan Congressional Budget Office.

A week earlier, before H.R. 5133 was passed by the and Judiciary Committee, a new report was released by AARP Public Policy Institute (PPI), giving data to Congress to enact legislation to lowering prescription drug costs. The report findings indicate that brand-name drug prices rose more than twice as fast as inflation in 2018.

According to the AARP PPI report, retail prices for 267 brand-name drugs commonly used by older adults surged by an average of 5.8 percent in 2018, more than twice the general inflation rate of 2.4 percent. The annual average cost of therapy for one brand-name drug ballooned to more than $7,200 in 2018, up from nearly $1,900 in 2006.

“There seems to be no end to these relentless brand-name drug price increases,” said Debra Whitman, Executive Vice President and Chief Public Policy Officer at AARP, in a Nov. 13 statement announcing the release of the report. “To put this into perspective: If gasoline prices had grown at the same rate as these widely-used brand-name drugs over the past 12 years, gas would cost $8.34 per gallon at the pump today. Imagine how outraged Americans would be if they were forced to pay those kinds of prices,” says Whitman.

Brand-name drug price increases have consistently and substantially exceeded the general inflation rate of other consumer goods for over a decade, notes the AARP PPI data.

If brand-name drug retail price changes had been limited to the general inflation rate between 2006 and 2018, the average annual cost of therapy for one brand-name drug would be a whopping $5,000 lower today ($2,178 vs. $7,202). The report’s findings note that the average senior takes 4 to 5 medications each month, and the current cost of therapy translates into an annual cost of more than $32,000, almost 25 percent higher than the median annual income of $26,200 for a Medicare beneficiary.

“While some people will undoubtedly see a slower rate of price increases as a sign of improvement, the reality is that there is absolutely nothing to stop drug companies from reverting back to double-digit percentage price increases every year,” said Leigh Purvis, Director of Health Services Research, AARP Public Policy Institute, and co-author of the report. “Americans will remain at the mercy of drug manufacturers’ pricing behavior until Congress takes major legislative action,” adds Purvis.

With over 340 days before the upcoming 2020 Presidential and Congressional elections, Senate Democrats say that more than 250 House-passed bills are “buried in Senate Majority Leader Mitch McConnell’s (R-Ky) legislative graveyard.” The Senate’s top Republican}, referred to as the “Grim Reaper,” has blocked consideration on these bills (including prescription drug pricing bills) effectively killing them. As the election day gets closer this number is expected to increase.

President Trump and Republican lawmakers are loudly chanting that the Democrats are “getting nothing done in Congress.” This is just fake “political” news. Major reforms that would prop up Social Security, Medicare, and lower Prescription Drug prices get the legislative kibosh in the GOP-controlled Senate. It is now time to put these bills to an up or down vote in the upper chamber. The voters will send a message to Congress next November if they agree with the results. It’s time for McConnell to put down his reaper

For details, of AARP report, go to http://www.aarp.org/rxpricewatch.

Herb Weiss, LRI’12, is a Pawtucket writer covering aging, health care and medical issues. To purchase Taking Charge: Collected Stories on Aging Boldly, a collection of 79 of his weekly commentaries, go to herbweiss.com.

Seniors Can Expect Small Increase in Their 2020 Social Security COLA

Published in the Woonsocket Call on Oct. 27, 2019

The Social Security Administration (SSA) announces Oct. 10 that Social Security and Supplemental Security Income (SSI) benefits for nearly 69 million Americans will increase 1.6 percent in 2020 (Some recipients receive both Social Security and SSI benefits).

Social Security and SSI recipients will be notified about their new benefit amount by mail in early December. This COLA notice can also be viewed online through their my Social Security account. People may create or access their my Social Security account online at http://www.socialsecurity.gov/myaccount.

According to SSA, the 1.6 percent COLA increase will begin with benefits payable to more than 63 million Social Security beneficiaries in January 2020. Increased payments to more than 8 million SSI beneficiaries will begin December 31, 2019. The Social Security Act ties the annual COLA to the increase in the Consumer Price Index as calculated by the Department of Labor’s Bureau of Labor Statistics.

The maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase from $132,900 to $137,700, says SSA.

The earnings limit for workers who are younger than “full” retirement age (age 66 for people born in 1943 through 1954) will increase to $18,240. SSA will deduct $1 from benefits for each $2 earned over $18,240.

The earnings limit for people turning age 66 in 2020 will increase to $48,600. SSA will deduct $1 from benefits for each $3 earned over $48,600 until the month the worker turns age 66.)

There is no limit on earnings for workers who are “full” retirement age or older for the entire year.

COLA Not Keeping Up with Rising Cost of Living

Over the years, Social Security’s COLA has not provided financial protection against rising costs, charge aging advocacy groups.

Social Security checks in 2019 are as much as 18 percent lower due to the impact of extremely low COLAs over the past 10 years, says an analysis recently released by the Arlington, Virginia-based The Senior Citizens League (TSCL). TSCL’s Social Security policy analyst, Mary Johnson authored this analysis.

Johnson’s analysis noted that from 2000 to 2010, COLAs routinely averaged 3 percent
annually. People who have been receiving Social Security checks since 2019, have only seen a COLA higher than 2,8 percent one time (in 2012), she said, noting that Social Security benefits have lost 33 percent of buying power since 2000.

Johnson’s findings reported that in 2010, 2011, and 2016 there was no COLA payable at all and, in 2017, the COLA was just 0.03 percent. However, in 2018, the COLA was 2 percent, but rising Part B premiums consumed the entire increase for roughly half of all beneficiaries.

Calls for Strengthening the COLA

According to the National Committee to Preserve Social Security and Medicare (NCPSSM), the upcoming COLA change will give a whopping $24 per month increase for the average beneficiary. With Medicare Part B premiums expected to rise around $8 next year, the net cost-of-living adjustment for most seniors will be only $16 per month. The new COLA brings the average monthly retirement benefit up to $1,503 — it’s just a $288 yearly raise for seniors living on fixed incomes.

NCPSSM notes that roughly half of America’s seniors rely on Social Security for at least 50 percent of their income, and 1 in 4 depending on the program for at least 90 percent of their income, the 2020 COLA increase does not go very far in helping these recipients pay their bills. A $16 per month probably won’t cover typical expenses, such as the cost of a single prescription copay, a month’s medical supplies, or transportation to a doctor’s appointment, adds the Washington, DC- advocacy group whose goal is to protect Social Security and Medicare.

“It’s ironic that as billionaires and big corporations continue to profit from the $1.5 trillion in Trump/GOP tax cuts, America’s seniors are to get by with a meager $24 monthly raise,” says Max Richtman in a statement after SSA announced the 2020 COLA increase. NCPSSM’s President and CEO. “The negligible 2020 COLA illustrates why seniors need a more accurate formula for calculating the impact of inflation on their Social Security benefits. For years, we have urged the government to adopt the CPI-E (Consumer Price Index for the Elderly), which reflects the spending priorities of seniors, including health care, as opposed to the current formula based on younger urban wage earners’ expenses,” says Richtman.

If the CPI-E were adopted, beneficiaries would see a 6 percent overall increase in benefits over 20 years compared to the current formula used, which yielded a zero cost-of-living adjustment three times during the past decade — and a mere 0.3 percent in 2017, says Richtman, noting that health care costs have increased about 6 percent in 2019 alone.

“The prices of the most commonly prescribed drugs for seniors on Medicare rose ten times the rate of inflation from 2013-2018. The cost of senior living facilities is growing at 3 percent annually – which adds up quickly over time,” adds Richtman.

Adds Webster Phillips, NCPSSM’s Senior Legislative Representative, “COLAs are out of sync with seniors’ actual expenses. Retirees have been living on very tight cost-of-living adjustments for a number of years now, which forces them to make hard decisions about their monthly budgets.”

In a statement, AARP chief executive officer Jo Ann Jenkins said, “Social Security’s annual COLA amount typically does not keep pace with all the increases in living expenses that most seniors face, including the costs of housing, food, transportation and, especially, health care and prescription drugs. AARP’s recent Rx Price Watch report found that retail drug prices increased by twice the rate of inflation during 2017, and have exceeded the inflation rate for at least 12 consecutive years,” she says.

“AARP will continue our advocacy for bipartisan solutions to help ensure the long-term solvency of the Social Security program, as well as adequate benefits for recipients. We will also continue to fight for lower health care and prescription drug costs, which are eating up a growing share of Social Security benefits,” adds Jenkins.

TSCL’s Mary Johnson says that her group calls on Congress to require a minimum COLA of no less than 3 percent every year, even in years when inflation falls below that amount. “Strengthening the COLA,” she says, “would help slow the drain of retirement savings and help keep older Americans out of poverty.”

For information about Social Security benefits and claiming strategies, those approaching retirement age may visit AARP’s Social Security Resource Center, at https://www.aarp.org/retirement/social-security/.