Bipartisan Fix Needed to Ensure Solvency of Social Security, Medicare

Published in the Woonsocket Call on June 10, 2018

On June 5, 2018, the Social Security and Medicare trustees released their annual report to Congress providing a snapshot of the long-term financial security of Medicare and Social Security, two of the nation’s two large entitlement programs. It was not good news for lawmakers. Nor for the 67 million people who receive retirement, or disability benefits from Social Security and for 58.4 million on Medicare.

The 2018 Social Security Trustee’s Report to Congress, prepared by nonpolitical actuaries and economists, warned that the combined asset reserves of the Old-Age and Survivors Insurance and Disability Insurance (OASDI) Trust Funds are projected to become depleted in 2034, the same as projected in last year’s Annual Report, with 79 percent of benefits payable at that time.

According to the Annual Report’s findings, the OASI Trust Fund is projected to become depleted in late 2034, as compared to last year’s estimate of early 2035, with 77 percent of benefits payable at that time. The DI Trust Fund will become depleted in 2032, extended from last year’s estimate of 2028, with 96 percent of benefits still payable.’

As to Medicare, the Medicare trustee’s report predicted that the Medicare hospital program will not be able to pay full benefits in 2026. The Trustees, for a second year in a row, issued a Medicare funding warning due to general revenue funding expected to exceed 45 percent of total Medicare outlays within 7 years, triggering a requirement for the President to submit to Congress in 2019 legislation to address warning to be considered on an expedited basis.

Released Report Triggers Discussion on Social Security, Medicare, Solvency

Media across the country reported the Social Security and Medicare trustees warning about long-term financial issues facing Social Security and Medicare. Just read the New York Time’s headline: “Medicare’s Trust Fund is Set to Run Out in 8 Years. Social Security.” Here’s CNN’s take: “Social Security Must Reduce Benefits in 2034 if Reforms Aren’t Made.” Or take a look at the New York Daily News’s attention-grabbing headline, “Social Security and Medicare Head Toward the Skids.”

With the release of the 2018 Annual Report, the powerful House Ways and Means Committee Chairman Kevin Brady (R-TX), called for ensuring the financial solvency of Social Security and Medicare. “The time is now to come together in a bipartisan manner to address these real challenges, he said.

Health Subcommittee Chairman Peter Roskam (R-IL) also gave his two cents. “The Medicare Trustees paint an even bleaker picture than last year, pointing to the need for commonsense reforms to ensure this critical safety net program continues to deliver health care to our nation’s seniors and individuals with disabilities,” said Roskam. “The solutions are not elusive as was demonstrated in part earlier this year when Congress acted on key Medicare reforms contained in the Bipartisan Budget Act of 2018 to improve access and quality in the Medicare program, but more work remains to be done. This warning from the Trustees is a sobering marker of the work ahead to ensure this program is around for our children and grandchildren,” he said.
Looking at the Glass Half-Full, not Half-Empty

Even with the bleak findings, the National Committee to Preserve Social Security and Medicare and other aging advocacy groups have their take.

Max Richtman, president and CEO of the National Committee to Preserve Social Security and Medicare (NCPSSM), notes the released Annual Report confirms that the Social Security’s trust fund is “still very much intact, with $2.89 trillion in assets – or $44 billion more than last year.”

There is still time for Social Security fixes, says Richtman. “The Trustees have confirmed that Congress has ample time (16 years) to enact modest and manageable changes to Social Security to address the fiscal shortfall. Most Americans agree that raising the payroll wage cap is the easiest and most effective way to strengthen Social Security’s finances, negating the need for harmful benefit cuts like means testing or raising the retirement age,” he said.

According to NCPSSM, since 2013 there has been a growing number of aging groups [along with Democratic lawmakers] calling to lift the wage cap and increase Social Security benefits. The Washington, DC-based NCPSSM’s Boost Social Security Now campaign endorses legislation in Congress introduced by Senator Bernie Sanders (I-VT), Rep. John Larson (D-CT) and others, which keeps the Social Security Trust Fund solvent well into this century, while boosting benefits and cost-of-living adjustments (COLAs).

On Medicare, the Trustees report shows that the Part A Trust Fund will be able to pay full benefits until 2026, at which point payroll taxes are estimated to be sufficient to cover 91% of benefits – if nothing is done to bolster the system’s finances, says Richtman, noting that NCPSSM supports several measures to keep Medicare financially sound, including a genuine push to allow the program to negotiate drug prices with pharmaceutical companies.

NCPSSM calls for restoring rebates the pharmaceutical companies formerly paid the federal government for drugs prescribed to “dual-eligibles” (those who qualify for both Medicare and Medicaid), in addition to innovation in the delivery of care and in the way, care is paid for – to keep Medicare fiscally sound for future beneficiaries.

AARP CEO Jo Ann Jenkins urges Congress to work “in a bipartisan manner to strengthen these vital social insurance programs to ensure they can meet their benefit promises for current and future generations.” She agrees with Richtman about the need to rein in rising Medicare pharmaceutical costs. “In particular, we need to take further steps to lower the cost of health care, especially the ever-rising price of prescription drugs. No good reason exists for Americans to continue paying the highest brand name drug prices in the world. High-priced drugs hurt Americans of all ages, and seniors, who on average take 4.5 medications a month, are particularly vulnerable,” she said.

Nancy Altman, President of Social Security Works and the Chair of the Strengthen Social Security Coalition, calls for strengthening and expanding Social Security not cutting it.

The Social Security program is “fully affordable,” says Altman, noting that “poll after poll shows that the American people overwhelmingly support expanding the program’s benefits.” Politicians are listening, too, she said.

“Social Security is a solution to our looming retirement income crisis, the increasing economic squeeze on middle-class families, and the perilous and growing income and wealth inequality. In light of these challenges and Social Security’s important role in addressing them, the right question is not how we can afford to expand Social Security, but, rather, how can we afford not to expand it,” says Altman.

It’s Time for a Bipartisan Fix

As the mid-term election approaches, it’s time for the Republican congressional leaders to work with their Democratic colleagues to craft bipartisan legislation to make permanent long-term fixes to Social Security and Medicare to ensure these program’s fiscal solvency for future generations.

It is projected roughly 10,000 Baby Boomers will turn 65 today, and about 10,000 more will cross that threshold every day for the next 19 years. By the time the last of this generation approaches retirement age in 2029, 18 percent of the U.S. will be at least that age, reports the Pew Research Center.

With the graying of American, the hand writing is on the wall. With the release of this year’s report by the Social Security and Medicare trustees, Congress must decisively act now to ensure that Social Security and Medicare are strengthened, expanded and benefits not cut. As Chairman Brady, of the House Ways and Means Committee, says, it is now time to address these real challenges. Hopefully, his House colleagues and lawmakers in the upper chamber will agree.

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Time to Change how Social Security Calculates ‘COLA’

Published in Woonsocket Call on October 23, 2016

On Tuesday, September 18, the U.S. Social Security Administration announced that the nation’s 65 million Social Security beneficiaries will be automatically be paid a minuscule 0.3 percent cost-of-living adjustment (COLA) to their monthly checks in 2017. The average monthly Social Security benefit next year will be $1,360, $5 more than now.

According to AARP, 153,349 Rhode Islanders received Social Security checks as of the end of 2014. Also, 22 percent of Rhode Island retirees depend on their Social Security check for 90 percent or more of their income. That’s chump change, not a lot of money for Rhode Island retirees to buy groceries, gas, or even catch up on their bills.

The federal agency detailed other changes that we can expect, too. Beginning in 2017, the amount of your earnings subject to the Social Security tax increases from $118,500 to $127,200. It’s estimated that this tax change impacts about 12 million of the 173 million people who pay into the retirement system.

Next year’s Social Security COLA increase is the smallest in a decade and comes after no increase in 2016 (zero increases also occurred in 2010 and 2011). Seventy percent of Medicare beneficiaries are protected by a hold-harmless rule, which keeps Social Security benefit payments from decreasing because of increased Medicare Part B premiums. However, 30 percent of Medicare beneficiaries (including high wage earners, those enrolled in Medicare and not yet receiving Social Security, and newly enrolled in Medicare) could see cost increases in their Medicare Part B premiums that cover their visits to doctors and hospitals. The increased premium costs will be deducted directly from their Social Security check.

Chump Change COLA Won’t Pay Bills

Responding to the federal government’s disappointing COLA announcement, AARP CEO Jo Ann Jenkins, whose Washington, DC aging group represents 37 million members, charges in a statement that one major domestic issue ignored by presidential debate moderators and one that demands attention from candidates is the future of Social Security.

“Over the last five years, Social Security COLA’s have remained small or nonexistent at 1,7 percent or lower, even though every cent can matter to beneficiaries and their families. After last year’s zero COLA, this year’s announcement doesn’t offer much help to the millions of families who depend on their Social Security benefits. As prescription prices skyrocket and Medicare premiums and other health costs increase, many older Americans have understandable concerns. Along with many groups, AARP has also asked Congress to ensure that Medicare premiums and deductibles don’t skyrocket next year,” says Jenkins.

Adds Max Richtman, President/CEO of the National Committee to Preserve Social Security and Medicare (NCPSSM), “No one can say with a straight face that providing the average senior with an additional four dollars a month will come even close to covering the true cost of living that retirees face. The average senior spends more than $5,000 a year on healthcare costs alone. A $4 Social Security COLA doesn’t even make a dent in covering rising costs for seniors.”

Richtman asserts that next year’s tiny COLA increase only continues the trend of historically low cost-of-living adjustments for retirees. “Over the past eight years, the current COLA formula has led to average increases of just over 1%, with three of those years seeing no increase at all. For the average senior, the 2017 COLA will mean an extra $4.00 per month which would barely cover the average cost of one Lipitor pill, a prescription drug frequently prescribed to seniors,” he says.

Richtman notes, “I’ve asked seniors at town hall meetings around the country how many of them think the COLA represents their true cost of living — laughter is always the response. We should move to a COLA formula that takes a more accurate measure of seniors’ expenses, which is a CPI for the elderly. The CPI-E has been in the experimental phase since 1982. It’s time to finish the job by fully funding the development of a more accurate COLA formula.”

Congress Must Legislatively Fix COLA Formula

In media releases, Rhode Island lawmakers call for tweaking how Social Security calculates Social Security COLAs.

Democratic U.S. Senator Sheldon Whitehouse, who sits on the U.S. Senate Special Committee on Aging, calls next year’s Social Security COLA increase an “insult.” He says, “For the fifth year in a row, Washington’s outdated formula has resulted in zero or next to zero cost of living adjustment for Social Security benefits. For the fifth year in a row, Rhode Island seniors will have to stretch their budgets to cover the rising cost of the basics, like food, housing, bills, and prescriptions. They didn’t bargain for this when they paid into Social Security over a lifetime of hard work. Congress needs to change the way we calculate Social Security COLAs.”

Adds, Rep. David Cicilline (D-RI), “This is completely unacceptable. The method for calculating cost of living adjustments is completely broken and fails to reflect the costs of gods and services seniors buy in Rhode Island and across the country.”
The Rhode Island Congressman calls for the Republican House Leadership to seriously consider pending legislation that will ensure that cost of living adjustments reflect the goods and services Rhode Island seniors actually buy. “Speaker Ryan should immediately bring the Protecting and Preserving Social Security Act to the floor so we can replace this outdated method for calculating cost of living adjustments with a model that actually meets the needs of Rhode Island seniors,” said Cicilline.

During the last Congress, the Senate and House controlled GOP have consistently kept legislative proposals from being considered that were crafted to bring needed reforms to the nation’s Social Security and Medicare programs. A newly elected Democratic President and a Congress controlled by Democrats might just be the political fix necessary to finally do the job that is ensuring the financial long-term solvency of these two domestic entitlement programs

AOA Reauthorization Bill Goes to President Obama for Signing

Published in Woonsocket Call on April 10, 2016

The Older American’s Act (OAA) current authorization expired in fiscal year 2011 because lawmakers were unable to reach an agreement on its reauthorization. On a bipartisan basis, Congress has finally passed the long-stalled legislation reauthorizing the OAA when the Senate passed the House-amended bill on April 7. Three weeks earlier the House had passed an amended version of S. 192, the Older Americans Act Reauthorization Act of 2016, by a unanimous voice vote. This legislative proposal amended the bill passed by the Senate on July 16, 2015. Now the passed legislation goes to President Obama, once signed it becomes law.

The very bi-partisan Senate reauthorization bill was sponsored by Chairman Lamar Alexander (TN) and Ranking Member Patty Murray (D-WA), of the Senate Committee on Health, Education, Labor and Pensions, and had 27 co-sponsors from each party.

OAA Authorization Has Lots of Positives

OAA’s latest reauthorization offers new support for modernizing multipurpose senior center, highlights the importance of addressing senior’s economic needs, permanently requires health promotion and disease prevention initiatives to be evidence-based, and promotes chronic disease self-management and fall prevention.

The law also includes: stronger elder justice and legal services provisions; needed clarity for caregiver support and Aging and Disability Resource Centers; new opportunities for intergenerational shared sites, and promotes efficient and effective use of transportation services.

Legislative inertia and a general undercurrent of opposition to any government programs by some members of Congress slowed consideration of the bill , says Dan Adcock, Director of Government Relations and Policy for the National Committee to Preserve Social Security and Medicare (NCPSSM). “You need champions to break through the ‘legislative inertia’ and OAA just did not have enough,” he says.

Senators Lamar Alexander (R-TN), Patty Murray (D-WA) and Bernie Sanders (I-VT) along with Reps. John Kline (R-MN) and Bobby Scott (D-VA) worked hard to finally get the Senate and House to pass this year’s OAA reauthorization, Adcock noted, stressing that there was no opposition to the bill when it passed the House and Senate on voice votes

While the passed OAA reauthorization bill has many positives, its chief weakness is that it does not raise the funding authorization level enough, says Adcock. “Unfortunately, the Older Americans Act has suffered under flat funding and sequestration cuts for several years and will need significant increases in appropriations to meet the critical demands of a senior population that will nearly double by 2030, warns Adcock, noting that that an increase of 12 percent a years is needed for the next several years to raising funding to an acceptable level.

“AARP urges President Obama to quickly sign this bill,” said AARP CEO Jo Ann Jenkins. “We are appreciative of the bipartisan work to get this bill passed. Reauthorizing the OAA will help the millions of vulnerable older Americans who depend on the programs and services that the OAA helps to fund.

“Reauthorizing the OAA is as important as ever to modernizing and improving the aging services network in our country. It’s passage reflects the heroic efforts of many advocates working together to educate Congress about how programs funded by the OAA support older Americans,” observed Steven R. Counsell, MD, AGSF, American Geriatrics Society President.

Adds Senator Sheldon Whitehouse (D-RI), who serves on the Senate Select Committee on Aging, “I am glad we were able to reauthorize and improve the Older Americans Act. This legislation authorizes more funding for meals and social services seniors depend on. It includes new protections against elder abuse, which I’ve been fighting to pass. And it gives residents of long-term care facilities-who often can’t communicate their wishes-a stronger advocate to speak on their behalf.”

Ratchet Up AOA Funding

For more than 50 years the Administration on Aging with its National Aging Network (State Units on Aging and Area Agencies on Aging) has provided federal funding, based on the percentage of the locality’s population 60 and older, for nutrition and supportive home and community-based services, disease prevention/health promotion services, elder rights programs, the National Family Caregiver Support Program and Native American Program.

Aging advocates will tell you that Congressional funding has not kept with the rising inflation or the increased demands of an aging society. Deep Congressional budget cuts, push by the GOP, have significantly reduced OAA’s ability to provide services to those on increased waiting lists. Being “penny-wise and pound foolish” should not be the way Congress looks at future OAA reauthorizations. NCPSSM’s Adcock will tell you that programming geared to helping seniors to age in place at home in their communities can save billions by reducing costly nursing facility and hospital stays.

Hopefully, the President is expected to sign it in a week or two. Hopefully he signs this it quickly on Monday .

Is it Really a Happy Birthday for Social Security?

Published in Woonsocket Call on August 23, 2015

With the stroke of his pen, over 80 years ago, on August 14, 1935, President Franklin D. Roosevelt signed the Social Security Act into law.  Over the last eight decades, this domestic program has become one of the most popular federal programs, paying $848 billion to 59 million beneficiaries at the end of calendar year 2014.  During that year, an estimated 166 million people had earnings covered by Social Security and paid taxes.

Celebrating the 80th birthday of Social Security over two weeks ago, AARP released the results of its anniversary survey.  The August 2015 survey followed earlier surveys conducted during previous milestone anniversaries in 1995 (60th), 2005 (70th) and 2010 (75th).  The latest 29 page report found that Americans of all ages continue to have strong feelings of support for Social Security, and this latest survey found several key themes.

According to the national survey of adults detailed in “Social Security 80th Anniversary Survey Report: Public Opinion Trends,” Social Security remains a core part of retirement security, it also remains popular across the generations and political ideologies.

“As we celebrate Social Security on its 80th anniversary, our survey found that it remains as important as ever to American families,” said AARP CEO Jo Ann Jenkins. “We also found that although most want to continue living independently as we age, obstacles to saving often continue to occur in our lives. However, Social Security continues to help generation after generation to diminish these obstacles.”

“When it comes to how important Social Security is to Rhode Islanders, the numbers speak for themselves,” said AARP Rhode Island State Director Kathleen Connell. “210,975 is the number of Social Security beneficiaries in the state; 23.7% say that Social Security provides 90% or more of their total income. And about half say that Social Security represents 50% or more of their income. Without Social Security, many retirees would be living below the poverty line.

“It is plain to see that protecting this key earned benefit is critical. A recent AARP survey found 68% of respondents express at least some concern that they won’t have enough savings to last their lifetime. Imagine if they are given reason to worry more about the viability of Social Security. People who are working toward retirement need to make themselves heard and – as we approach the 2016 elections – hold politicians to their promises to protect Social Security.”

Social Security Key to Surviving Old Age

            Older American’s look to rely on their Social Security checks to pay bills, say the researchers.  Four in five adults (80%) rely or plan to rely on Social Security benefits in a substantial way.  Survey respondents (33%) say that Social Security is the source of income that they rely on or plan to rely on most during their retirement years.

The study finding’s reveal that Social Security has broad support, even across political ideologies and America’s generations, too.  Sixty six percent believe that this domestic program is one of the most important government programs when compared to others. This view has remained consistent over time in similar AARP anniversary surveys taken in 1995, 2005, and 2010.  According to the study, the vast majority of Americans (82%) also believe it’s important to contribute to Social Security for the “common good.”

Like aging baby boomer and seniors, even younger Americans value this program. Specifically, nine in ten adults under 30 (90%) believe Social Security is an important government program, and nearly nine in ten (85%) want to know it will be there for them when they retire.

The survey respondents also want to live independently in their communities at home. The findings indicate that four out of five adults (83%) consider it extremely important to have the ability to stay at home as long as they want; although 64% believe they won’t be able to do so as they age and become frail. Additionally, while 68% feel it extremely important to have family around, 80% want to be able to financially take care of themselves so their children and other relatives won’t have to support them financially.

While recognizing the importance of financial planning, survey respondents say they face a multitude of challenges that keep them from effectively putting away money for their retirement.  Specifically, 69% note that they must focus their income on current financial needs, while 47% believe they do not have enough money left over to put into their retirement savings after paying their monthly bills.  Survey respondents (39%) says health issues and family problems keep them from saving for retirement.

SS Trustee Report Gives Nation a Warning

The six member Social Security Board of Trustees issued its 2015 report, on July 22, giving the nation a snapshot of the fiscal health of the nation’s retirement and disability program.

Within the 257 page report, the Trustees gave a dire warning to Congress.  “Taken in combination, Social Security’s retirement and disability programs have dedicated resources sufficient to cover benefits for nearly two decades, until 2034.  However, the projected depletion date for the separate Social Security’s Disability Insurance (DI) Trust Fund is only a little more than one year away, in late 2016,” says the widely anticipated federal report.  “After the DI trust fund exhaustion, annual revenues from the program’s dedicated payroll and taxation of Social Security benefits will be sufficient to fund about three-quarters of scheduled benefits through 2089.”

According to the Social Security Administration, there were about 10.4 million Americans who received benefits from the DI Trust Fund in 2014, including roughly 42,429 in the Ocean State.  In order to qualify, these beneficiaries are required to have worked in a job covered by Social Security, and must have been unable to work for a year or more due to a disability. If Congress fails to act to direct more funding into the DI trust fund, disabled workers throughout the nation and in Rhode Island will be hit hard financially right in their wallets.

AARP CEO Jo Ann Jenkins offered her observation about the released Social Security Trustees report. “While the Trustees once again report that the combined Old Age, Survivor and Disability Insurance Trust can pay full retirement, survivor and disability benefits for approximately two more decades, we know that if no action is taken, benefits will be cut by nearly 25% in 2034.  As the campaign season gets underway, we will be urging all Presidential candidates to share their plans for the long term solvency and adequacy of Social Security.”

Democrats are calling for an easy fix to shoring up the DI Trust Fund, specifically shifting a small percentage of the Social Security payroll tax from the retirement fund to the disability trust fund.  This has occurred 11 times in the past with bipartisan support.  But, with the 2016 presidential elections now catching the attention of politicos, GOP Senators have threatened to block any transfer of funds, charging that following this strategy is just a way to push the political “hot potato” issue down the road.  Political observers say that this year’s Republican opposition to quickly fixing the DI Trust Fund is a way to force Democrats to the negotiation table to get concessions on higher Social Security payroll taxes or to cut program benefits.

Now, it’s time for Congress to pull together to fix the ailing Social Security program to ensure its future solvency and to adequate fund the DI Trust Fund.  Lawmakers from both sides of the aisle must stop their political bickering and craft a compromise to keep Social Security’s retirement and disability trust funds well-funded and up and running for years to come.  For the sake of older Americans who now rely on their meager Social Security benefits to survive, our elected federal elected officials must begin to act like Statesmen not simple-minded politicians.  Hopefully, the voters will push for this change in thinking when they go into the polls in 2016.

 

 

Report: Hiring Older Workers Makes Good Business Sense

Published in Woonsocket Call on May 3, 2015

Here’s a sound strategy for America’s CEOs to follow to improve their corporation’s bottom line. AARP’s recently released study suggests, just hire or retain older workers.

An AARP study, released on April 27, discredits widespread myths and misconceptions about age 50+ employees, showing that they have skills and abilities that can make them key to operating a successful business. The report, “A Business Case for Workers Age 50+: A Look at the Value of Experience 2015,” says that the argument for employing older employees has grown even stronger during the last decade, reinforcing a 2005 AARP study that found that these experienced workers are highly motivated, productive and even cost-effective.

Researchers claim that this study documents for the “first time why attracting and retaining experienced age 50+ workers is critical for businesses seeking an advantage in the labor market.”

Older Workers Sound Investment

“Leading employers across all industries value the expertise and experience of workers 50+ and know that recruiting, retaining and engaging them will improve their business results,” said AARP CEO Jo Ann Jenkins in her statement on the releasing the 92 page report.

Just as today’s 50+ population is disrupting aging and eroding negative stereotypes, today’s 50+ workforce is adding value by exhibiting traits that are highly sought after in today’s economy,” Jenkins added.

Adds Roselyn Feinsod, senior partner at Aon Hewitt, a multinational company providing human resources, retirement and health solutions, that prepared this report, “Workers age 50+ are highly valuable within many organizations – particularly in those industries that require highly skilled workers or workers with unique skill sets, such as health care or energy.”

Researchers say that the AARP report comes at a time when experienced workers are playing an increasing role in America’s workplace. In 2002, workers age 50+ made up only 24.6 percent of the workforce. By 2012, they were 32.3 percent. By 2022, they are projected to represent 35.4 percent of the nation’s total workforce.

The AARP new study addresses a widespread misconception that older workers cost “significantly more” than younger workers. In fact, adding more talented older employees to your workforce can result in only minimal labor cost increases, says the researchers, noting that 90 percent of large employers now base pay in part on job performance, rather than exclusively on length of employment.

In addition, in terms of retirement costs, only 22 percent of large companies now offer a defined benefit pension plan, down significantly from the 68 percent in 2004.
Looking at the 50+ segment of the workforce from a performance standpoint, AARP and Aon Hewitt say that older workers remain the most engaged age group. The study reports that 65 percent of workers age 55+ are considered “engaged”, based on survey data, while younger employee engagement averages 58 to 60 percent.

Although the generational differences in engagement might not seem large, “it takes only a five percent increase in engagement to achieve three percent incremental revenue growth,” the report finds. This can translate into a large company with $5 billion in revenue achieving a $150 million revenue increase as a result of even a five percent engagement improvement, the study says.

The report concludes “An engaged older workforce can influence and enhance organizational productivity and generate improved business outcomes.” Other advantages of older workers include their job experience, professionalism, strong work ethic, lower turnover, and knowledge.
AARP commissioned the study to assess the advantages of both retaining and attracting older workers. The analysis relies primarily on data from Aon Hewitt databases, an extensive literature review and interviews with 18 large employers to obtain anecdotal information on how they approach older workers.

Contributing to Rhode Island’s Economy

“We have noted in the past the relevance of Rhode Island’s so-called Longevity Economy,” said AARP Rhode Island State Director Kathleen Connell. “Despite being just 36% of Rhode Island’s population in 2013 (expected to grow to 38% by 2040), the total economic contribution of the state’s 50-plus population accounted for 46% of Rhode Island’s GDP ($24 billion). Now we see another reason to embrace the older population.

Connell notes that “This new report reinforces the value of older Rhode Islanders as they continue to be a key asset in the workforce. It is especially good to have reliable data that exposes the false concept that older workers cost significantly more than younger workers. The truth is, that older workers increase labor costs minimally while contributing experience and stability to businesses across the spectrum.

“Many employers in Rhode Island understand this. AARP Rhode Island gets frequent calls from business actively seeking older workers. They know the value and the wisdom they bring to the workplace,” says Connell.

According to Charles Fogarty, Director of the Division of Elderly Affairs (DEA), the recently released AARP study helps his agency spread this message, “older workers are expected to play a key role in sparking Rhode Island’s comeback.”

“We support policies and programs to help this crucial segment remain active in the labor force by connecting older workers to services and training,” says Fogarty, noting that AARP’s study confirms, “our seniors are a valuable asset in our workforce given their wealth of knowledge, ability to mentor younger colleagues, and commitment to hard work.”

Deputy Director Lisa D’Agostino, of the state’s Department of Labor and Training agrees with DEA’s Fogarty. “Age 50+ workers are a talented segment of our workforce that is often overlooked and untapped when businesses seek workforce solutions. Given today’s demand for a skilled workforce the solution is simple – mature workers can bring the talent, leadership and work ethic employers need,” she says, noting that labor force participation for this group is on the rise and unemployment rates are lower than that of the prime working age population and have been for the last ten years.

Oak Hill resident Hank Rosenthal, 64, confirms the importance and value of hiring older workers. But, during his two-year job search, after being laid off, he experienced job discrimination, he claims. “Having been interviewed by numerous Human Resource professionals, they just seem incapable of understanding that the years of experience someone has gained is an asset. They seem unable to appreciate that knowledge, experience, and even skills acquired over a lifetime can be transferred and used in virtually any organization or business,” he says.

Rosenthal, now gainfully employed, views his older contemporaries as being “more stable, reliable, have better work ethics and generally make great employees, in line with the observations of the AARP report. With the difficulty in finding employment he believes that companies have not figured this out yet. “What a terrible waste of human capital,” he says.

While older workers may be forced to continuing working to pay their bills, many employees will take jobs for both psychological and social fulfillment. Hiring and retaining older workers may be a simple way for American businesses to maintain their competitiveness in a world economy. The report says that this can easily be accomplished by having “flexible workplaces, options for transitioning to retirement and fostering generational diversity and inclusion.” The AARP report is a must read for any CEO or Human Resource Director.

For the full report, go to http://www.aarp.org/research/topics/economics/info-2015/business-case-older-workers.html.

Herb Weiss, LRI ’12, is a Pawtucket-based writer who covers aging, health care and medical issues. He can be reached at hweissri@aol.com.

“Doc Fix” Law Brings Permanent Changes to Medicare Physician Payments

Published in Woonsocket Call on April 19, 2015

Congress put aside its fierce partisan bickering and came together to pass H.R. 2 – the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). This week President Obama took the opportunity to sign the legislation package into law.

The Congressional fix repeals and replaces the flawed Medicare physician reimbursement system known as the sustainable growth rate or Sustainable Growth Rate (SGR). For the past 13 years, physicians have faced the possibility of an arbitrary cut in their Medicare payments unless Congressional lawmakers passed a so-called “Doc.fix” Medicare bill. Since 2003, Congress has passed 17 short-term bills to block these cuts in Medicare doctors’ fees that were called for under the existing law.

On April 14, the U.S. Senate passed the MACRA by a whopping 92 to 8 (the House passing its version of the bill in late March by a large margin, 392-37). Two days later, at an outdoor signing ceremony in the Rose Garden, President Obama signed the legislation into law, with the House bill brokers, Speaker John Boehner (R-Ohio) and House Minority Leader Nancy Pelosi (D-Calif.) in attendance. .

A Permanent Fix Prevents Payment Cuts

Just hours before a cut in reimbursement that would take place this week, a rare bipartisan Congressional effort prevented a 21 percent cut in Medicare payments to occur. It’s a permanent fix. And the new law extends the Children’s Health Insurance Program, which has provided coverage to millions of American children.

At the signing, Obama called the passage “a milestone for physicians, and for the seniors and people with disabilities who rely on Medicare for their health care needs,” noting that it would also strengthen the nation’s health care delivery system for the long run.

Obama stated this new law “creates incentives to encourage physicians to participate in new, innovative payment models that could further reduce the growth in Medicare spending while preserving access to care.”

According to the Center for Medicare Advocacy (CMA), a national nonprofit, nonpartisan law group that provides education, advocacy and legal assistance to older people and people with disabilities, the estimated cost of the new law is roughly $214 billion over 10 years. CMA says roughly half (approximately $35 of the total $70 billion over 10 years) will come from Medicare beneficiaries through changes that will increase their out-of-pocket costs for health care.(through means testing of higher-income Medicare beneficiaries, increased Part B premiums, and added deductibles to Medigap plans purchased in the future.”

CMA adds that the nation’s pharmaceutical and insurance industries were not required to pay for any of this law, although doing so would have paid for a major portion of the SGR replacement.

On the Back of Medicare Beneficiaries

Aging advocacy groups, including the Center for Medicare Advocacy and AARP, failed in their attempts to improve the Senate bill Medicare beneficiaries, including a repeal of the annual therapy caps, raising eligibility standards for low-income programs and permanently extending outreach and education funding for critical programs aimed at low-income beneficiaries. The Senate bill passed without amendments.

While many gave thumbs up to the new law, Max Richtman, President and CEO of the Washington, DC –based National Committee to Preserve Medicare and Medicaid, sees big problems with MACRA. “The Senate ‘Doc Fix’ vote has traded one bad policy for another, shifting the costs of Congress’ failed Medicare payment formula for physicians to seniors who can least afford to foot that bill. Contrary to claims by supporters, on both sides of the aisle, this ‘doc fix’ will hit millions of seniors who aren’t ‘wealthy’ by any stretch of the imagination. Seniors at all income levels who are already paying steep premiums for Medigap plans to help control their health care costs will now be hit with even higher costs. Forty-six percent of all Medigap policy holders have incomes of $30,000 or less.”

Richtman added, “Medicare beneficiaries will also be forced to contribute nearly $60 billion in premiums over the next decade thanks to passage of this so-called ‘fix.’

It’s no surprise that conservatives applaud this legislation as ‘the first real entitlement reform in two decades’ because it fulfills their political goal of shifting costs to seniors, cutting benefits and expanding means-testing to push Medicare further and further away from being the earned benefit seniors have long valued and depended on.”.

“Trading a bad deal for doctors for a bad deal for seniors is not a legislative victory and it is a surprising move from so many in Congress who have previously vowed to protect Medicare from harmful benefit cuts and seniors from cost-shifting,” says Richtman. .

AARP CEO Jo Ann Jenkins also expressed strong disappointment in the Senate not passing an amendment that would have removed Medicare’s arbitrary cap on physical therapy, speech language pathology, and occupational services. “Many Medicare patients, particularly stroke victims and people with Parkinson’s and Multiple Sclerosis would have benefited,” says Jenkins. With a majority of the Senate agreeing with this amendment, Jenkins says that AARP will continue to lobby to remove the arbitrary coverage cap.

But, Jenkins sees the positives. “Passage of MACRA moves Medicare in the right direction toward better quality health care and greater transparency for patients. These changes will benefit Medicare beneficiaries, as well as physicians and other providers, hospitals, and the overall health care system,” she says.
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Through the enactment of MACRA Congress put aside its political differences that made a permanent fix to a flawed law. If you can do it once, let’s see our lawmaker do this again, to provide improved programs and services to our nation’s older population.

Herb Weiss, LRI ’12 is a Pawtucket-based writer covering aging, health care and medical issues. He can be reached at hweissri@aol.com.

Protecting Retirement Savings Should Be a Priority

Published on March 7, 2015 in the Pawtucket Times

Last month, President Obama used his presidential bully pulpit to publicly support a proposed U.S. Department of Labor (DOL) rule, endorsed by a coalition of aging, labor and consumer groups, that reportedly limits conflicts of interest, increases accountability, and strengthens protection for Americans receiving retirement investment advice.

At the February 23 press conference held at the Washington, D.C.-based AARP headquarters, attended by Obama, Save Our Retirement Coalition members and lawmakers, the President called for the issuing of the proposed rule, still awaiting Office of Management and Budget (OMB) review and final DOL action. The updating of DOL rules and requirements would require higher standards for financial advisors, requiring them to act solely in their client’s best interest when giving financial advice, said Obama.

The Save Our Retirement Coalition says that the final rule is “needed to help protect Americans’ hard earned retirement savings from advisers who recommend investments based on their own interest – such as those that pay generous commissions – not because they serve their clients’ best interest.”

Existing Rules Outdated

In his remarks at AARP, Obama called the rules governing retirement investments written over 40 years ago “outdated,” filled with “legal loopholes,” and just “fine print,” needing an overhaul.  The existing rules governing retirement investments were written “at a time when most workers with a retirement plan had traditional pensions, and IRAs were brand new, and 401ks didn’t even exist,” the President explained.

At the event, Secretary of Labor Thomas E. Perez., claimed that his agency has substantially reached out to “a wide range of stakeholders,” to craft the proposed rule that was sent to OMB.  “The input we have received to date has been invaluable, but we’re not even close to being done. We have a lot more listening to do, and once the Notice of Proposed Rule Making is published in the coming months, I look forward to hearing from as many stakeholders as I can. We’re going to get this right, because the strength of the middle class depends on a secure retirement,” he says.

“We know the people we represent have worked hard to save for retirement, and we believe that they deserve to have financial advisers who work just as hard to protect what they’ve earned,” said AARP CEO Jo Ann Jenkins, in her remarks.  AARP is a member of the Save Our Retirement Coalition.

“AARP, a major consumer advocate, has been fought for this consumer regulation for over five years to ensure that Americans of all ages get the best financial advice when planning for their retirement,” says Jenkins. “Recently AARP also found that 9 out of 10 employers who sponsor retirement savings plans support holding advice to such a ‘best interest’ standard,” she adds. .

“In today’s world, it’s hard enough to save for retirement and achieve your financial goals” added Jenkins. “We don’t need to make it more difficult by allowing some on Wall Street to take advantage of hard-working Americans. Bad financial advice is just wrong,” she says.

According to Save Our Retirement Coalition, “the need for the proposed rule was made starkly apparent in a White House report released showing that conflicts of interest are costing middle class families and billions of dollars annually. The 30 page report, released last month, details the current regulatory environment for financial planners, providing evidence on the negative financial impact of conflicted professional investment advice draining older American’s retirement saving accounts.

The White House report, issued by Council of Economic Advisors, cited evidence pulled from the literature, showing that “conflicted advice reduces investment returns by roughly 1 percentage point for savers receiving that advice” The report also found that “a retiree who receives conflicted advice when rolling over a 401 (k) balance to an IRA at retirement will lose an estimated 12 percent of the value of his or her savings if drawn down over 30 years.  For those receiving conflicted advice “takes withdrawals at the rate possible absent conflicted advice, his or her savings would run out more than 5 years earlier.”

Holding Wall Street Accountable

“Many investment professionals do what’s right,” said AARP Rhode Island State Director Kathleen Connell. ”But loopholes in the law are allowing some on Wall Street  to take advantage of hard-working Americans, recommending investments with higher fees, riskier investments, and lower returns to make even higher profits for themselves. Last year alone, hidden fees, unfair risk and bad investment advice robbed Americans of as much as $17 billion,” she states.

“AARP agrees that financial professionals of all types serve a valuable role in building the wealth and security of the investing public,” added Connell. “We simply want to achieve some consistency in the standards across the industry. Here is Rhode Island, many retirees are very concerned about their investment savings and they deserve protection. Our position is that retirement accounts managed by a broker should receive the same protections as regular investment accounts held with an advisor,” she says.

“Rhode Islanders have who have worked hard for their money and deserve a new standard that holds Wall Street genuinely accountable for helping them choose the best investments for themselves, their family and their future,” she adds.

Security Trade Group Concern

             The Securities Industry and Financial Markets Association (SIFMA), a trade group representing securities firms, banks and asset management companies, is waiting to see the details of the proposed rule.  SIFMA CEO Kenneth E. Bentsen, Jr., stated: “While we cannot comment on a proposal we have not yet seen, we have ongoing concerns that the DOL regulation could adversely affect retirement savers, particularly middle class workers.  The new regulation could limit investor choice, cause inconsistencies as different regulators would apply different standards to the same regulatory accounts, prohibit guidance, and raise the costs of savings for retirement.”

But, both Obama and the Save Our Retirement Coalition strongly disagree with SIFMA’s assessment of the potential impact of DOL’s proposed rule, which has not yet been issued and is ultimately subject to change after the public comment period.

A large majority of financial planners put their clients first when giving them investment advice. But, as you know a few bad apples can truly spoil the barrel.  If trade groups representing financial planners fail to act to rein in financial planners who give conflicted advice to pad their pockets, than federal regulations can quickly do that job by applying “simple, commonsense standards.”

It makes practical and political sense to me.

Here is a linked to President Obama’s comments at the AARP Press Conference: http://www.whitehouse.gov/photos-and-video/video/2015/02/23/president-obama-speaks-aarp.

Herb Weiss, LRI ’12 is a Pawtucket-based writer who covers aging, health care and medical issues.  He can be reached at hweissri@aol.com . Or call 401/ 742-5372.