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.”

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GOP Senators Avoid Angry Constituents During July Recess

Published in Woonsocket Call on July 9,2017

With Senate Republican leadership pulling their health care bill, titled “Better Care Reconciliation Act of 2017,” scheduled for vote before the Fourth of July recess, because they were unable find 50 votes, opponents continue their lobby against an anticipated rewrite of the unpopular Senate bill. Mobilization to oppose passage of a GOP health care bill began immediately after the House passed its legislation, titled “The American Health Care Act” in May.

“It is essential that all of those who oppose this dangerous bill have their voices heard,” said Richard Fiesta, Executive Director of the Alliance for Retired American, one of many aging groups mobilizing its membership during the Fourth of July recess. “The fact that most Republicans in the Senate are too afraid to show up in public should tell you everything you need to know. The Senate bill is dangerous to all Americans, particularly older Americans, and must be stopped,” he said.

Lawmakers Choose to Not Face Angry Constituents

Throughout the nation, thousands of constituents of GOP senators made it clear to their lawmakers returning to their home districts, “vote no on the Senate version of the healthcare bill,” that would repeal and replace President Obama’s Affordable Care Act of 2017 (ACA), popularly, called Obamacare. Opponents of Trumpcare held sit-ins (referred to as die-ins) to remind their GOP Senators that 22 million low-and medium-income Americans would lose their health coverage with the slashing of $800 billion from Medicaid, warning that there would be a significant increase in premium costs.

According to the Town Hall project, between January to May, 33 GOP senators have not held a single in person town meeting this year, these lawmakers choosing not to face angry constituents who oppose the Senate health care bill. During this 11-day recess, most Republican senators chose not to hold town meetings, most skipping their community’s Fourth of July parades, to keep away from hostile crowds.

But, Moderate GOP Sen. Susan Collins, of Maine, appeared at Fourth of July parade in Eastport, Maine and was overwhelmingly thanked for her opposition to the Senate health bill. At the parade, the Washington Post stated that spectators urged Collin’s “to stay strong” in opposing the GOP Senate’s version of the health care bill. The Post noted that only three other Republican senators, Ted Cruz, of Texas, Dean Heller, of Nevada, and Lisa Murkowski, of Alaska, also appeared in their community’s Fourth of July parades.

Seeing the Writing on the Wall

Political reality is now setting in for Senate Majority Leader Mitch McConnell, of Kentucky, who has shifted his position on repealing Obamacare if he cannot pull the 50 votes necessary to pass his health care bill. With all Democratic and Independent senators in their caucus opposing passage of the bill, GOP senate leadership can only afford the defection of two Republican senators if they want their bill to pass. Can he revise this legislation to satisfy the concerns of moderate and conservative members of his caucus to ensure passage?

The Washington Post reported, last Thursday, at a Kentucky Glasgow Rotary Club lunch, McConnell admitted to the attending Rotarians that Republicans would have to work with Democrats to stabilize the health insurance markets if they failed to pass the Senate bill.

As predicted with the GOP senators returning from recess, facing angry constituents, a growing number are now publicly withholding their support for the senate bill. At press time, there have been multiple reports that ten senators are now opposing the legislation.

“There have been little to no senator-level discussions on amendments to the Senate health bill during the July recess,” says Dan Adcock, Director of Government Relations and Policy for the National Committee to Preserve Social Security and Medicare (NCPSSM). He expects more negotiations to take place when the Senate reconvenes this Monday.

Adcock says, “there would be a delay between an announced “compromise” bill and Senator floor consideration since the Congressional Budget Office would first need time to perform a cost estimate on the amended sections of the bill.”

Senator Cruz’s Fix for Senate Health Bill?

According to Adcock, that is being most talked about in the corridors of the Capitol is Sen. Ted Cruz’s proposal to replace the existing language in Senate bill — that would allow insurance companies to pick and choose which Obamacare essential benefits they would offer — with a plan to require that insurance carriers offer at least one plan with Obamacare essential benefits and all other plans could decide which benefits to include and exclude.

But, Adcock sees a multitude of problems with the Cruz proposal, making it difficult to be inserted into a final Senate health bill.

“First, it really is not that different from the current language that allows insurance companies to offer plans without the required ACA essential benefits,” says Adcock. “Under the Cruz proposal, healthy people would enroll in health plans that aren’t required to cover all ACA essential benefits, while sick people or enrollees with pre-existing conditions would tend to enroll in plans with all of the ACA essential benefits. As a result, the latter plans would be very expensive and unaffordable for less healthy enrollees,” he says.

Adcock estimates that Texas Senator’s proposal and the Senate health bill’s essential benefits waiver provisions would be particularly harmful to the 40 percent of enrollees age 50 to 64 who have one or more pre-existing condition.

“Second, there is a good chance that the Senate Parliamentarian will rule that the Cruz proposal violates Budget Reconciliation rules because it is superfluous to reducing federal spending,” says Adcock, noting that if this happens his proposal in the form of an amendment would face a 60-vote point of order. The Senate Republicans do not have the 60 votes they need to waive this budget rule.

Another point that is being negotiated between Senate leadership and moderate and conservative senators is provisions that would restructure federal payments to state Medicaid programs, says Adcock, noting that the Senate bill and House-passed healthcare bills would restructure the way federal funding is provided to the states – changing from the current matching rate formula to per capita caps or block grants at state option.

Medicaid Cuts Hit LTC Sector

“Per capita caps limit federal funding for state Medicaid programs to an arbitrary per beneficiary funding level. This would ultimately shift costs to states by eliminating the guarantee of additional federal funds if state costs increase because of underlying health care costs, demography or complexity of care. We are particularly concerned about how these cuts would affect Medicaid long-term care coverage – both home and community and nursing home care,” Adcock added.

Adcock also sees other negatives of the draft Senate health care bill.

“From the year 2025 on, the senate bill bases the per capita cap on an even less generous measure than the House bill. While the House bill used a measure based on medical inflation, the Senate bill would allow Medicaid to grow only at the rate of general inflation. Medical inflation has historically grown at a higher rate than general inflation. And, even the index used in the House-passed AHCA would be unlikely to keep up with growth in health care costs,” notes Adcock.

Adcock added, “some moderate Republican senators object to linking Medicaid payments in 2025 and thereafter to general inflation. However, Sen. Pat Toomey – who drafted this provision – does not want to compromise on it.”

And, Sen.Portman and Capito also continue to express interest in increasing funding for Opioid substance abuse treatment, adds Adcock. The Senate health bill includes $2 billion for this purpose. Portman has called for $40 billion for treating Opioid addictions, he says.

With senators returning to Washington, D.C., after their roughly one-week Fourth of July recess, there are only 14 legislative working days before their month-long August recess begins on July 28 with their return Sept. 5.

Recently, ten Senate Republicans have called on Senate Majority Leader McConnell to cancel the upcoming August recess to allow them to focus on five priorities: fixing health care, funding the federal government by Oct.1 to avoid a shutdown, dealing with the debt ceiling, passing the budget resolution and improving the nation’s tax code.

This will not likely happen due to the Senate’s legislative workload.

According to Adcock, the Senate either needs to approve its health care bill or abandon it by the upcoming August recess because the repeal of Obamacare is holding up consideration of the FY 2018 budget resolution and tax reform.

“That’s because the Senate healthcare bill is being considered in the form of the FY 2017 budget reconciliation bill. There cannot be a conference agreement on the FY 2018 budget reconciliation bill until the FY 2017 budget reconciliation is either enacted or abandoned,” he says.

Finally, Adcock notes, “A conference agreement on the FY 2018 budget resolution is necessary to set in motion consideration of a FY 2018 budget reconciliation bill that would include tax reform and perhaps cuts to mandatory spending programs, like Medicare and Medicaid. Budget reconciliation bills are filibuster-proof in the Senate.”

Calling for Political Compromise

A recently released USA Today/Suffolk University poll at the end of June says that “just 12 percent of Americans support the Senate Republican health care plan. On the other hand, “a 53 percent majority say Congress should either leave the law known as Obamacare alone or work to fix its problems while keeping its framework intact.”

So, now it’s time for the White House and Congress to read the political winds. Americans want health care fixed for the right reasons, not for political reasons. Lawmakers must put aside their philosophical differences and craft a “win-win” compromise to fix Obamacare’s flaws.

It’s the right thing to do.