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March 27, 2017 – I recently had a gathering with a dozen retired friends and each one voiced concern about their future. I found this interesting, given all of us had productive careers and had worked most of our lives. Given recent news, they fear they are going to lose not just The Affordable Care Act (ACA) but also Social Security, Medicare and Medicaid under the present administration. I decided to do some research to find out for myself if there was any basis for their fears. Here’s what I found.
Although Trump promised not to cut these programs, our Republican controlled Congress is in fact rolling out a plan to gut Social Security, Medicare, Medicaid and repeal (or undermine and destroy) the ACA to achieve conservative goals of decreasing government spending, taxes and size. If successful, these policies will devastate millions while hugely benefiting the top 1%.
The Social Security program is an earned retirement benefit funded by payroll taxes equal to 13% of the lifetime earnings of the recipient. Social Security alone is insufficient for senior support but taxes are imposed on any over limit income a senior earns while receiving these benefits.
Social Security now has $2.8 trillion in cash. With boomer retirement and people living longer than anticipated when the program originated, if nothing is done by 2034, it is claimed this cash will be gone and a 21% across the board benefit cut to Social Security will have to take effect to sustain the program through 2090. Republicans favor reducing benefits now to close this funding gap. Progressives favor increasing benefits by lifting the cap on earnings subject to payroll taxes to fund it.
Sam Johnson (R. Texas), Chair of the Ways and Means Social Security Subcommittee, introduced The Social Security Reform Act of 2016 in December to save Social Security by drastically reducing benefits and making the program less of a universal earned benefit and more of a means tested safety net that aims only to provide basic support to the poorest retirees. Johnson claims this bill would extend the longevity of Social Security without a tax increase. Linda Benesch of Social Security Works claims that this plan makes more cuts than if Congress did nothing.
Tom Price, the new Secretary of Health and Human Services, backs House Speaker Paul Ryan’s “premium support” or so-called voucher program for seniors to obtain private medical insurance rather than depending on the current Medicare program. Both claim that privatization is the only way to proceed to avoid increasing taxes, particularly for the rich. The AARP Public Policy Institute found that the GOP premium support plan would imperil retirees because it would:
- End the promise of a guaranteed set of earned Medicare benefits;
- Provide an annual fixed stipend to purchase private insurance insufficient to cover most of a retirees’ medical expenses. The idea that competition among private insurers will lower premiums is not assured. Private insurers have overhead and will pass those costs onto the consumers. The elderly would have to shop for a private policy. This is a complex, confusing choice to make at a predictably vulnerable time, making seniors subject to exploitation and abuse.
- It is a cost-shifting measure to keep Medicare solvent where government pays less and we pay more at a time when retirees have a limited income [Note: Social Security payments will decrease or end if Republicans privatize that program too.]
- Trump advocates bringing down drug prices. Why isn’t Medicare empowered to negotiate lower prices under this bill?
Almost 2/3 of Medicaid costs come from low income elderly and disabled persons with serious and thus expensive health care costs. 61% of money paid for long term care under ACA went to elderly patients. The program reduced the number of uninsured Americans age 50 to 64 by half. Repealing the ACA would fundamentally alter the way Medicaid works and would increase the premiums of an average 64 year old by $2100 per year according to AARP.
Although details have not been provided, with the repeal of ACA, tax subsidies would be replaced with tax credits and private health savings accounts would be encouraged for seniors to provide for their medical expenses. Rather than sharing the cost of Medicaid with states, block state innovation grants would be provided to them to create high-risk pools of sicker individuals and funding of preventative care.
These partisan bills will in fact eliminate our safety net and lessen the retirement security of most seniors, who ironically constitute a substantial portion of the Republican base.