House Budget Committee Plan Calls for Privatization of Medicare

Published in Woonsocket Call on July 23, 2017

Over four months ago President Trump released his draconian FY 2018 Budget, now Congress begins to hammer out its budgetary spending plan. Last Wednesday, the House Budget Committee, chaired by Rep. Diane Black (R-TN), sent the Republican drafted budget plan to the House floor for consideration. After a 12-hour markup held in Room 1334 Longworth HOB, the budgetary blueprint passed by a vote of 22 to 14, along party line. Rep. Black’s GOP controlled panel defeated 28 amendments offered by Democrats.

Once the House and Senate pass their budget resolutions, the House and Senate Appropriations subcommittees “markup” appropriations bills. The House and Senate vote on appropriations bills and reconcile differences.

Rep. Black says that the GOP FY 2018 Budget Resolution, “Building a Better America,” passed on July 19, will balance the federal budget within 10 years by cutting spending, reforming government and growing the economy. According to the House Budget chair, the recently released budget achieves $ 6.5 trillion in total reduction over 10 years. It sets overall discretionary spending for the fiscal budget at $1.132 trillion ($621.5 billion in defense discretionary spending and $511 billion in non-defense discretionary spending).

The House budget plan is the first step that Republicans must take to begin their efforts to overhaul the nation’s tax code to grow the economy. It also provides increased funding for defense and the building of Trump’s border wall. It also requires food stamp recipients to work for their benefits.

Although the Social Security program is spared, it bars recipients from receiving Social Security Disability Income recipients from also receiving unemployment benefits. But, most worrisome to aging group advocates, the passed House Budget Committee budget makes major cuts to Medicaid, turning the Medicare program into a voucher program. But, Medicare is targeted for major changes.

In the Eyes of the Political Beholder

Upon passage, the House Budget Chair, Rep. Black, said in a statement, “I am proud of the work done by the members of the committee. We’ve spent months reviewing all aspects of the federal government and have put together a plan that will balance the budget, promote economic growth, strengthen our national defense, and make Washington more accountable to taxpayers. Our budget also takes the crucial first step in the reconciliation process to fix our broken tax code and make long overdue mandatory spending cuts and reforms.”

But, Rep. John Yarmuth (D-KY), Ranking Member of the House Budget Committee, in a statement expressed a vastly different opinion as to the impact of the panel’s passed budget resolution. “Republicans on the House Budget Committee just approved a budget that the American people do not want and do not deserve from their government. Their budget adopts the worst extremes of the Trump proposal by cutting taxes for millionaires and billionaires at the expense of everyone else. It cuts at least $1.5 trillion from Medicare and Medicaid, and puts at risk investments in nearly every national priority, from education and veteran services, to transportation, environmental protections, and medical research. Democrats believe we should be investing in the American people, our economy, and greater opportunity for all, and we will continue to fight against this irresponsible budget when—or if—it is brought to the House floor,” he said.

House Budget Plan Calls for Substantial Changes to Medicare

Medicare takes a huge hit, $ 487 billion over a ten-year period, in the House Budget Committee’s passed FY 2018 Budget, says Paul N. Van De Water, in a blog post on the website of Center on Budget and Policy Priorities (CBPP). The Senior Fellow serving as CBPP’s Director, Policy Futures, says that the budget plan’s changes to Medicare include higher income-related premiums for those making $85,000 and over (twice the amount for couples), limits on malpractice awards, raising Medicare’s eligibility age from 65 to 67, also increasing cost sharing of beneficiaries.

In his posting, Van De Water details the substantial changes made to Medicare, one of the nation’s largest entitlement programs, in the House Budget Committee’s passed budget. He notes, it would “replace Medicare’s guarantee of health coverage with a flat premium support payment or voucher, [starting in 2024] that beneficiaries would use to help buy either private health insurance or a form of traditional Medicare.” Although there are no details in the House Budget Committee’s plan to determine its impact on beneficiaries, he says that most people enrolled in traditional Medicare would pay more with the new changes than under the current law, according to a previous Congressional Budget Office analysis.

NCPSSM Sounds the Alarm About Privatization of Medicare

As the House Budget Committee began its markup of the FY 2018 budget, Max Richtman, President of the National Committee to Preserve Social Security and Medicare (NCPSSM) warned in a statement that the GOP-controlled panel “is targeting the health and financial well-being of America’s seniors by making another attempt to privatize Medicare.”

“Recent polling indicates that large majorities of Americans across party lines prefer that Medicare be kept the way it is, not to mention that President Trump repeatedly promised to protect the program during the 2016 campaign,” says Richtman.

Richtman says that converting Medicare into a voucher program is an existential threat to the program itself. “Over time, giving seniors vouchers to purchase health insurance would dramatically increase their out of pocket costs since the fixed amount of the voucher is unlikely to keep up with the rising costs of health care,” he says. “And, as healthier seniors choose less costly private plans, sicker and poorer seniors would remain in traditional Medicare, leading to untenable costs, diminished coverage, and an eventual demise of traditional Medicare, plain and simple. Of course, raising the eligibility age to 67 – as the House spending plan also proposes – is a drastic benefit cut.”

Undermining Medicare has been a long-held dream of fiscal conservatives. Their “premium support” proposal is a thinly veiled scheme to allow traditional Medicare to “wither on the vine,” as former House Speaker Newt Gingrich once put it,” adds Richtman.

Privatization is being sold as “improving customer choice,” but based on the way current Medicare Advantage plans work, private insurance will continue to offer fewer choices of doctors than traditional Medicare does. If traditional Medicare is allowed to shrink and collapse, true choice will disappear, too, says Richtman.

Stay tuned….

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.

Social Security, Medicare Are Solvent…at least for Now

Published in Woonsocket Call on July 16, 2017

Just days ago, a released annual federal report, the 2017 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds, says the nation’s Social Security and Medicare programs continue to work, are fiscally solvent, but future fixes will be needed to maintain their long-term actuarial balance.

The Social Security Administration’s (SSA) annual snap shot of the fiscal health of Social Security and Medicare, two of the nation’s largest entitlement programs, released on July 13, is important to millions of beneficiaries. According to the federal agency, in 2017 over 62 million Americans (retired, disabled and survivors) received income from programs administered by SSA, receiving approximately $955 billion in Social Security benefits.

The Good News

The trustee’s report projects that Social Security will be financially solvent until 2034 (unchanged from last year), after which SSA can pay 77 percent of benefits if there are no changes in the program. The 269-page report also noted that the Medicare Trust Fund for hospital care has sufficient funds to cover its obligations until 2029, one year longer than projected last year, then 88 percent afterward if nothing is done to strengthen the system’s finances

The trustees report says that there is now $2.847 trillion in the Social Security Trust Fund, which is $35.2 billion more than last year — and that it will continue to grow by payroll contributions and interest on the Trust Fund’s assets.

Social Security Administration efficiently manages its entitlement program, says the trustee report. The cost of $6.2 billion to administer to program in 2016 was a very low 0.7 percent of the total agency’s expenditures.

The trustee’s project a 2.2 percent cost-of-living adjustment (COLA) for Social Security beneficiaries in 2018, the largest increase in years. In addition, Medicare Part B premiums will also remain unchanged next year. Most beneficiaries pay a monthly premium of $134 (this amount increases for those with higher incomes.)

Social Security is “Stable and Healthy for Now”

According to the National Committee to Preserve Social Security (NCPSSM), the recently released trustee’s report confirms that the federal entitlement program is “stable and healthy for now,” while acknowledging there will be future challenges if “corrective action is not taken.”

“Forty percent of seniors (and 90 percent unmarried seniors) rely on Social Security for all or most of their income. The average monthly retirement benefit of $1,355 is barely enough to meet basic needs, and the Trustees’ latest projected cost-of-living increase of 2.2 percent will not keep pace with seniors’ true expenses. Under these circumstances, any benefit cuts (including raising the retirement age to 70 as some propose) would be truly painful for our nation’s retirees,” says Max Richtman, NCPSSM’s president and CEO, in a statement responding to the release of the federal report.

“Opponents of Social Security may once again try to use this report as an excuse to cut benefits, including raising the retirement age,” warns Max Richtman. “We must, instead, look to modest and manageable solutions that will keep Social Security solvent well into the future without punishing seniors and disabled Americans,” he says.

Depending on what the final Senate health bill looks like, the legislation could reduce the solvency of Medicare by two years, say Richtman. “The National Committee opposes the GOP health plan and rejects efforts to privatize Medicare. We advocate innovation and continuing efficiencies in the delivery of care, allowing Medicare to negotiate prescription drug prices, and restoring rebates the pharmaceutical companies used to pay the federal government for drugs prescribed to “dual-eligibles” (those who qualify for both Medicare and Medicaid) – in order to keep Medicare in sound financial health,” he says.

Safeguarding and Expanding Social Security Benefits

In a statement, Richard Fiesta, Executive Director of the Washington, DC-based Alliance of Retired Americans, notes that the Trustees project that the Social Security Disability Insurance (SSDI) trust will be fully solvent until 2028, five years longer than last year’s report. “In light of this data, it makes no sense that the President’s FY 2018 budget seeks to cut Social Security Disability Insurance funding by $63 billion,” he says.

Despite the trustees’ strong report, Fiesta believes that improvements can be made that would benefit all workers and retirees. His organization supports safeguarding and expanding Social Security benefits, providing a more accurate formula for cost-of-living adjustments, and lifting the cap on earnings for the wealthiest Americans.

Fiesta adds, “reining in the prices of prescription drugs would strengthen Medicare for the future and reduce costs to retirees.”

AARP CEO Jo Ann Jenkins, in a statement, calls for bipartisan action in Congress and the Trump administration to ensure the strong fiscal health of Social Security and Medicare programs. “Social Security should remain separate from the budget. Medicare can improve if we reduce the overall cost of health care, rather than impose an age tax, and if we lower prescription costs, instead of giving tax breaks to drug and insurance companies,” she says.

Finally, in a statement, Nancy Altman, President of Social Security Works, also chairing the Strengthen Social Security Coalition, says that this year’s trustee’s report clearly indicates that the nation can fully afford an expanded Social Security. Altman says that polling continues to show that Americans support expanding the program’s benefits.

Altman believes the Social Security program can solve the nation’s “looming retirement income crisis, the increasing economic squeeze on middle-class families, and the perilous and growing income and wealth inequality.” So, when confronting these challenges, she says, “the question is not how can we afford to expand Social Security, but, rather, how can we afford not to expand it.”

Ensuring the Long-Term Solvency of Social Security

Those nearing retirement or retired will be assured existing Social Security benefits, promises the 2016 Republican Party Platform. “Of the many reforms being proposed, all options should be considered to preserve Social Security. As Republicans, we oppose tax increases and believe in the power of markets to create wealth and to help secure the future of our Social Security system,” says the Platform. Simply put, the GOP opposes the raising of payroll taxes on higher income taxpayers to stabilize or expand Social security and supports privatization, allowing Wall Street to control your Social Security benefits.

On the other hand, last year’s Democratic Party Platform opposed Social Security cuts, privatization or the weakening of the retirement program, along with GOP attempts to raise the retirement age, slash benefits by cutting cost-of-living adjustments, or reducing earned benefits. The Democratic Platform called for taxing people making above $250,000 will bring additional funding into the entitlement program.

Congressional gridlock has not blocked legislation from being introduced to fix the nation’s Social Security program. According to Social Security Works, over 20 Social Security expansion bills have been introduced in the House and Senate since 2015. Recently, the Social Security 2100 Act, introduced by Rep. John Larson (D-CT), has 162 House cosponsors —around 85 percent of all Democratic representatives. Similarly, around 90 percent of Senate Democrats are on record in favor of expanding, not cutting Social Security.

Many consider Social Security to be the “third rail of a nations politics.” Wikipedia notes that this metaphor comes from the high-voltage third rail in some electric railway systems. Stepping on it usually results in electrocution and the use of the term in the political arena refers to “political death.” With the Social Security and Medicare programs now on firm financial footing, it is now time for Congress to seriously consider legislative actions to ensure the longevity and expansion of these programs. When the dust settles after the upcoming November 2018 elections, we’ll see if Social Security is truly “a third rail.”

GOP Trial Balloon Called “Trojan Horse”

Published in Woonsocket Call on April 16, 2017

In previous years, the GOP leadership, now controlling both chambers of Congress, pushed legislative proposals to eliminate Social Security and Medicare by privatizing these programs. These attempts were clearly visible for all to see. But, we are in new political times with a GOP White House seeking the destruction of these programs, too, but as some say through the back door.

According to an Associated Press story, published on April 10, 2017, as the Trump Administration begins to learn from its failed attempt to repeal Obamacare, tax code reform is now on its agenda. One trial balloon, being floated by a GOP lobbyist with close ties to the Trump Administration, would eliminate the mandated payroll tax that all American workers pay to fund Social Security and Medicare.

“This approach would give a worker earning $60,000 a year an additional $3,720 in take-home pay, a possible win that lawmakers could highlight back in their districts even though it would involve changing the funding mechanism for Social Security, according to a lobbyist, who asked for anonymity to discuss the proposal without disrupting early negotiations,” says Writers Josh Boak and Stephen Ohlemacher in their Associated Press story.

Currently, about 163 million American workers pay Social Security taxes and 59 million retired and/or disabled persons collect monthly benefits. About one family in four receive income from Social Security. The nation’s social insurance and welfare program is a “pay-as-you-go-program.” Today’s workers support the program by paying their taxes into the program and the money flows back out to the program’s current beneficiaries.

GOP Stealth Attack on Social Security

Responding to the GOP trial balloon, in her blog post published last Tuesday on the Huffington Post, a politically liberal American online news web site, Contributor Nancy Altman, President of Social Security Works called the GOP trial balloon “a Trojan horse”, noting that “It appears to be a gift, in the form of middle class tax relief, but would, if enacted, lead to the destruction of working Americans’ fundamental economic security.”

If President Trump proposes “the Trojan horse, it would be the newest shot in the ongoing Republican war against Social Security. That war has failed so far. The American people overwhelmingly support Social Security because they appreciate that it provides working families with basic economic security when wages are lost as the result of death, disability, or old age. And it does so extremely efficiently, securely, fairly, and universally,” says Altman in her April 11, 2017 blog post.

According to Altman’s blog posting, after Trump and GOP lawmaker have suffered legislative defeats in their “frontal attacks” against Social Security to eliminate the programs “it appears they are contemplating a “stealth attack instead.” She noted, “In the 1980s, Republicans, who had long tried but failed to cut government programs directly, discovered a new tactic. They realized that they could undermine government and eventually force cuts to spending by cutting taxes and, in their words, starve the beast. Now, Trump is making plans to use that same tactic against Social Security.”

“Not only would the Trump proposal starve Social Security of dedicated revenue, it would ultimately destroy it. Social Security is not a government handout. It is wage insurance that the American people earn, as part of their compensation, and, indeed, pay for with deductions from their pay,” observed Altman.

Altman warns that GOP lobbyist’s proposal to eliminate the payroll tax to fund Social Security is consistent with Trump’s previous actions. “No one should be fooled by Trump’s campaign promise not to cut Social Security. Before he became a candidate, he called it a Ponzi scheme and advocated privatizing it. He chose, as his vice president, Mike Pence, who complained that the Bush privatization proposal didn’t go far enough, fast enough. As President, he has chosen a staunch opponent of Social Security, Mick Muvaney, as his budget director, and another staunch opponent, Tom Price, as Secretary of Health and Human Services (one of Social Security’s trustees.), she said.

In an email urging recipients to sign a petition to protect Social Security’s funding [the payroll tax], Michael Phelan, Deputy Director of Social Security Works noted, “For decades, Republicans in Washington and Wall Street bankers have told us that Social Security is going broke―even though Social Security has a $2.8 trillion surplus and can pay out 100% of benefits for the next 17 years and over 75% of benefits owed after that.” He warns the “Republican’s tax plans might be a self-fulfilling prophecy. By starving Social Security of funding, they could finally receive their wish―replacing Social Security’s guaranteed benefit with unstable Wall Street retirement plans.”

The “Great Wisdom” of a Payroll Contribution Tax

Max Richtman, President & CEO of the National Committee to Preserve Social Security and Medicare, says, “It’s no surprise that the GOP lobbyist who suggested this dangerous idea and remained anonymous. After all, who would want to own up to an idea that would trigger the collapse of the most successful government program in U.S. history?”

Richtman adds, “Peddling this kind of scheme reminds me of President George W. Bush’s 2005 privatization proposal. Only in this case, the risk factor shifts from the uncertainty of Wall Street to benefit cuts that will almost certainly occur when Social Security is forced to compete for government funding with other discretionary programs. There was great wisdom in President Roosevelt’s plan for funding Social Security through a dedicated payroll tax. As President Roosevelt said, ‘We put those payroll contributions there to give the contributors a legal, moral and political right to collect their pensions…No damn politician can ever scrap my social security program.”

Darrell West, Vice President and Director of Governance Studies at the Washington, D.C.-based the Brookings Institution, sees an uphill battle to formalize the tax policy to eliminate the payroll contribution to fund Social Security. “I don’t think Trump will be able to eliminate or reduce the Social Security tax because of its dire consequences for the program itself. The program is very popular with the general public and many recipients count it as their sole support. Republicans will get killed if they try to do this. It is not a viable option now or anytime in the near future.”

When Trump releases his tax code reform proposal, aging advocates must remember that the devil is in the details. Read the proposal thoroughly with a fine-tooth comb