Thursday, October 25, 2007

Fires, Floods and the “Vicissitudes of Life”

''We can never insure 100 percent of the population against 100 percent of the hazards and vicissitudes of life''...Franklin Delano Roosevelt

It was true 73 years ago and as this week’s devastating fires in Southern California remind us, it’s still true today. But whether it’s destructive flames on the West coast or devastating floods in the Gulf coast, we’ve seen just how quickly life’s circumstances can take a turn. One of the great untold stories during these times of national crisis is the Social Security success story.

8,700 Social Security checks have already been sent to residents in Southern California. Unfortunately, some of those checks will arrive even though residents have evacuated and their homes have been destroyed. But staff at the local Social Security offices will coordinate efforts to get those checks to California seniors, the disabled and their families who will need them. In its seven-decade history, Social Security has never missed a payment and it won’t this month either.

National tragedies like the California fires also remind us what a critical link SSA offices provide to a vulnerable population. But these offices have faced limited budgets forcing closures, low staffing and huge disability hearing backlogs. We’ve written to Congress urging support of increased funding for SSA administration.

In the wake of this disaster, the Social Security Administration is reminding beneficiaries to use direct deposit. It’s a simple process to enroll either directly with SSA or through the Treasury Department’s GoDirect campaign. As disaster victims in the Gulf coast and now those in Southern California have found, direct deposit allows Social Security beneficiaries access to their funds immediately without worrying if they even have a mailbox left or not.

Friday, October 19, 2007

COLA Can't Keep Up

The Social Security Administration has announced a 2.3% cost of living adjustment for the more than 50 million Americans receiving Social Security in 2008. This adds about $24.00 to the average monthly Social Security check of $1,055 and is the lowest increase in four years.

“Rising healthcare costs, including Medicare Part B premiums and prescription drug costs, have outpaced Social Security cost-of-living increases for years. Part B premiums alone have more than doubled since 2000. Combine that with high energy and food costs and you can see why seniors are feeling the pinch.

COLA’s are critically important to help seniors maintain a basic standard of living. However, as long as we continue to ignore the need for system-wide healthcare reform, Social Security COLA increases will continue to fall short for America’s seniors, disabled and their families”. Barbara B. Kennelly, President/CEO

We’re thankful to have a Social Security system that has any cost of living increases at all – most private pensions don’t, and buying inflation adjusted annuities with your savings is one of the most expensive retirement products around.

But the reality of this cost-of-living increase is that come January, beneficiaries will likely see it all spent and then some. The Arizona Republic summarized the dollars and cents realities of living on a fixed income. Our fall Newsletter also looks at how rising healthcare costs are eating away at the COLA.

Tuesday, October 16, 2007

Falling Down the Rabbit Hole...

We have to admit to being more than just a little confused when we read press coverage of yesterday’s baby boomer event at the National Press Club. Just in case you missed it, the nation’s first baby boomer, Kathleen Casey-Kirschling, filed online for Social Security benefits yesterday to much hoopla.

But what was truly unexpected about this event was the lack of the administration’s usual gloom and doom propaganda. In fact, Social Security Commissioner Michael Astrue was incredibly reasonable and definitely not singing from the same “sky-is-falling-the-baby-boomers-will-suck-us-dry” hymnal preferred by the Bush administration.

Here is what Commission Astrue said about Social Security’s financial outlook:

“There’s no reason for any immediate panic”
“It’s not catastrophic”
“There’s no factual basis for these ‘nuclear winter’ scenarios
many have described”


Wow. You have to wonder if the White House knows he’s sticking so closely to the facts.

But here’s where we find ourselves down the rabbit hole. While the Bush administration’s Social Security head is telling the straight story on the program’s long-term fiscal picture (unlike what we generally hear elsewhere from this administration), multiple news organizations virtually ignored it in favor of the White House’s crisis propaganda. Almost all of the coverage today parrots the administration’s “we can’t afford the Baby Boomers ” line even though that is not what the SSA Commissioner actually said at this event.

The Washington Post even went so far as to belittle the Commissioner and Casey-Kirschling for having the nerve to express their confidence in Social Security’s future. The media loves a crisis...this isn’t new. However, Social Security is too important to millions of American seniors and their families to play so fast and loose with the facts in the name of headlines.

The first boomer said it best yesterday when she said,

"I think the baby boomers will want to get this fixed...they're going to want to take care of their children and their grandchildren."

We agree. If only we could set aside the phony crisis calls to do it.

Building the Case for Privatization

By Barbara B. Kennelly, President/CEO
The National Committee to Preserve Social Security & Medicare

The Bush administration continues its ongoing campaign to build a case for the same discredited Social Security “reforms” already rejected by Congress and the American people.

This second Treasury Department report on Social Security continues the administration’s intergenerational warfare propaganda by attempting to pitt baby-boomers against future generations by describing today’s retirees as receiving “excess benefits”.

These so-called “excess benefits” are actually about $1,000 a month for the average Social Security beneficiary. Two out of every three Social Security beneficiaries receive over half of their income from Social Security, and it's the only source of income for nearly one-in-five seniors. These are the realities beneficiaries’ face which receive little to no attention in this report.

While not offering proposals, this report does suggest private accounts as one of only two ways to pre-fund Social Security. Social Security is social insurance and should not be twisted to meet the Wall Street notion of what Social Security should be, a pre-funded system measured by investment rates of return. However, it is clear that this is exactly the case currently being built in these Treasury department reports

Tuesday, October 2, 2007

Seniors or Insurers?

The Senate is currently searching for money from the Medicare program to prevent next year’s cut in doctors’ reimbursements. If you needed to cut billions of dollars from Medicare which of these options would you choose? Eliminate all or part of the $54 billion in government subsidies going to private insurers in the Medicare Advantage program (as proposed by the independent Medicare Payment Advisory Commission-MedPAC ) or cut healthcare benefits going to seniors making higher than average incomes?

Seniors or Insurers? A seemingly easy choice.

For the Bush Administration and their allies in Congress the choice, of course, is to cut benefits for seniors. According to Jonathan Weisman and Christopher Lee writing in the Washington Post today, Nevada Senator John Ensign is once again pushing his plan to expand Medicare means testing.

This is a perpetual favorite for those who believe the way to erode public support for Medicare is to turn it into a welfare program serving only the poor by driving wealthier seniors into private insurance. As we’ve seen with the SCHIP debate, the concept of providing healthcare for all drives some in Washington crazy.

The Post says:

Already, the section of Medicare that pays for outpatient care, including doctors' fees, imposes some means testing. Single seniors with incomes exceeding $82,000 and couples with incomes about $164,000 pay higher premiums on a sliding scale as their wealth rises. Those thresholds rise each year with inflation. The original Bush proposal would have frozen those thresholds at $82,000 and $164,000, so more seniors would have been affected by means testing over time. The same thresholds would have applied to the new prescription drug benefit. According to the White House budget office, the proposal would have saved more than $10 billion over five years.

But wait. Cutting government overpayments to private insurers in Medicare would save more than 5 times that amount! Even if you trimmed just half of these outrageous overpayments to insurers you would still save more than this means testing proposal.

Seniors who aren’t living paycheck to paycheck are an easy target. But means testing Medicare will not improve its long-term solvency. Driving healthier, younger and higher-income seniors away from Medicare will change the program from one providing universal coverage to all beneficiaries to a welfare program with increasingly unsustainable costs.

Maybe that’s their ultimate goal after all.

It’s More Than Just Nickels and Dimes

So you probably saw the headline this morning... “Medicare Premiums Up 3.1%” ...and thought ‘hey that’s not so bad’. At least that what CMS hopes you think.

But Medicare premiums are just one part of the picture. Seniors are also facing higher co-payments, out of pocket costs, rising prescription drug fees and doughnut holes. In 2000, the Medicare Part B premium was $45.50. Next year it will be $96.40. This 112% increase is certainly not good news for seniors living on a fixed income. Social Security cost of living increases just can’t keep up with rising healthcare costs, which continue to grow unchecked. These programs aren’t flawed, healthcare costs are running amok.

The Center for Retirement Research at Boston College has issued a new report describing the real challenges facing seniors...

The long-run solution is to control the costs not just of Medicare, but of the entire health care system. The United States spends a much higher share of GDP on health care services than other countries, yet in many instances produces less favorable outcomes.

Here is coverage of yesterday’s Medicare premium announcement. We also shouldn’t forget that this 2008 premium is artificially low. It assumes that Congress will cut payments to doctors, which is unlikely, meaning there's a possibility those costs will be passed on to beneficiaries in later years.