Entitled to Know

And in the same vein, Presidential candidate Fred Thompson has been winning praise from the media for “doing something” on Social Security. Doesn’t anyone care about what his plan actually does?

Here are some of the basics of Thompson’s Social Security proposal:

· Divert money out of Social Security and into private accounts.
· Make huge cuts in Social Security benefits.
· Increase the public debt by billions of dollars.
· Shift risk to individual retirees.

Thompson’s plan would even go beyond the President’s failed Social Security proposal by:

· Making larger reductions in Social Security benefits by completely indexing benefits to prices rather than using a combination of wages and prices
· Raise the Social Security retirement age for those with private accounts, effectively reducing their Social Security benefits further.
· Require workers, through an automatic but reversible wage reduction, to contribute 2 percent of their wages to a private investment account.

We’ve posted a full analysis of the Thompson plan on the National Committee’s website.

It’s Medicare Open enrollment time again. A painful annual ritual for American seniors who, in order to receive prescription drug coverage under Medicare’s privatized Part D program, must wade through pounds of statistics, charts and cost analyses just to determine if their current plan will even serve their needs next year.

Why, is this so complicated? Welcome to the world of privatized Medicare where each year most of these private insurers switch their formularies (in other words, drop drugs), require generics and increase premiums and co-payments. 75% of seniors will face a premium increase this year if they don’t switch plans.

However, it truly could be hazardous to beneficiaries’ fiscal and physical health if they don't shop around rather than stick with their current plan out of loyalty, confusion or fear of the unknown.

According to the National Seniors Law Center, the premium for the least expensive plan in New York will go up 167%, 90% in Florida and 44% in Pennsylvania. More than 2.5 million low-income seniors must switch plans this year to avoid having to pay out-of-pocket costs for the first time.

A survey by the consulting firm, Avalere Health, reports that in many states Part D premiums are doubling for the second year in a row. The popular Humana PDP Standard Plan charged $6.44 a month in Maryland when it first marketed its plan to seniors, two years ago. Last year’s premium doubled to $13 and now the premium will more than double again to $27.20. More than 80% of Part D enrollees are in the top ten drug plans and all but two have raised their premiums. AARP’s Medicare RX Plan-Saver is the most popular plan and, according to Avalere’s research, will increase its premium an average of 65% in 2008.

But as the insurance industry knows very well, it’s human nature is to stick with what you know. So far, that has been true for Medicare beneficiaries even to their detriment. The increasingly daunting task of analyzing a myriad of private drug plans’ (52 drug-only plans nationwide in 2008) formularies, co-payment, and premium schedules each and every year is an absurd burden which benefits insurers not seniors.

It didn’t have to be this way. Seniors want and need a prescription drug benefit under Medicare which would provide stable and consistent coverage which manages costs with no gaps in coverage like the so-called “doughnut hole”. What they’ve gotten with this privatized program is an overly complicated process that puts insurers’ bottom lines ahead of seniors’ needs.

For more information on how to navigate the Part D enrollment maze here is a link to our Frequently Asked Questions guide.

You can also find out more about the privatization of Medicare and Part D on our website.

by Maria Freese, NCPSSM Government Relations& Policy Director

Congress and the President are beginning the final stages of a high-stakes political game of poker as the year winds down. With no compromise in sight on funding levels for any of our government agencies, this is the first time in recent memory that a President has categorically refused to negotiate on the total amount of spending by the federal government. His Administration picked a top-line number and he’s sticking to it no matter what – a tactic the American public has become all too familiar with during the past 7 years.

Included in this game of chicken is funding essential to operate the Social Security Administration. SSA is one of the few agencies that raises money for its own operations. A small portion of every dollar of payroll taxes covers administrative costs.

But because SSA funding is mixed together with funds for other agencies such as National Institutes of Health, SSA must compete for a limited pot of money. The result is that since 2001, SSA has suffered a $1 billion cut from its budget requests, leaving it without enough money to replace employees as they leave. This despite the new responsibilities Congress and the President have placed on the Agency, including verifying eligibility for the low-income subsidies in the Medicare Part D prescription drug program – and at a time when the agency is facing the beginning of benefit claims by the baby boom generation.

The result? Offices around the country are closing, and Americans are facing increasingly long waiting times for everything from getting a question answered to having an application for disability payments reviewed. The disability issue is especially critical, as the average wait for a hearing now stretches 18 months.

Congress added $275 million to the President’s request for the Agency’s funding in the 2008 Labor-HHS Appropriations bill, for a total of $9.9 billion. This amount would help SSA tread water – it’s by no means enough to reverse the shortfalls of the past. But the President has threatened to veto this bill, and it’s not clear Congress will have the votes to override the veto. If Congress is forced to start cutting programs in order to meet the President’s demands, SSA funds are at risk just like any other agency’s – despite the program’s $190 billion surplus.

As the President pushes Congress into this game of political brinksmanship, we hope he will consider that more is at stake here than an arbitrary set of budget numbers. For seniors and the disabled who count on Social Security, their very survival may be at risk.

Entitlement hysteria is in full view on Capitol Hill this week as the Senate Budget committee held its first hearing on legislation proposed to create yet another bipartisan commission. We’ve already expressed our position on this commission, see here and here . Unfortunately, this first hearing proceeded down exactly the path we’ve expressed concern about before.

During this hearing there was virtually no acknowledgement that the challenges facing Social Security and Medicare are very different. A one-size-fits-all discussion of "entitlements" ignores the unique challenges facing Medicare (a healthcare program) and Social Security (a retirement and social insurance program). Lumping these programs together in search of policy solutions makes no sense. There was also little discussion of national healthcare reform and its role in this debate, even though skyrocketing healthcare costs are what is jeopardizing Medicare’s solvency.
Curiously missing from the Budget Committee’s table of experts was CBO Director Peter Orszag who has said,

“We do a disservice by uniting the health care issue with the aging issue"

He has testified many times to other Congressional committees that the rising cost of healthcare represents a far more serious fiscal danger than aging baby boomers. Medicare, not Social Security, is what is driving up the costs of entitlements. Medicare costs are increasing so dramatically because of overall increases in the cost of health care, not because of our aging population.

Coincidentally two new studies also came out this week detailing just how critical the healthcare debate is for seniors and Americans of all ages. The Kaiser Family Foundation reports that between 1997 and 2003, median out-of-pocket health spending increased by 50% while individual income rose by just 15%. Insurance premiums where the largest chunk of that increase. The Commonwealth Fund surveyed patients in seven industrialized nations and found Americans spend double what people in the other countries do on health care, but have more trouble seeing doctors, are the victims of more errors and go without treatment more often.


Focusing so much attention on "entitlements" while glossing over underlying issues such as healthcare reform is a fatal flaw in this commission approach.

''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.

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.

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.

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,

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

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

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.

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.

Make no mistake about it...the Bush administration clearly understands the value of a well structured and financed public relations campaign. Yesterday’s release of the first in a series of Treasury department “issue briefs”, signals the start of another run at defining Social Security reform in a way that best suits this administration’s ultimate goals...the creation of private accounts and massive benefit cuts. What the White House doesn’t seem to get is that sometimes even the best PR and Marketing strategy can’t sell misguided policy goals.

Here’s our analysis of this first Treasury brief entitled "Social Security Reform: The Nature of the Problem".

The Brief overstates the problem repeatedly by using the discredited “infinite horizon” calculation. The American Academy of Actuaries, the leading professional organization of actuaries, has warned that infinite-horizon projections “provide little if any useful information about the program's long-term finances and indeed are likely to mislead anyone lacking technical expertise in the demographic, economic, and actuarial aspects of the program's finances into believing that the program is in far worse financial shape than is actually indicated”.

Focuses on Benefit Cuts. Treasury Secretary Paulson says that Social Security can only be fixed by raising taxes or cutting benefits, yet he is focusing on benefit cuts.

Issue Brief Introduction: “Social Security can be made permanently solvent only by reducing the present value of scheduled benefits and/or increasing the present value of scheduled tax revenues.”

Secretary Paulson’s Statement : “While differences over personal accounts and taxes dominate the public debate over this issue, in my conversations I found that there are many other things on which people agree.”

Statement from the White House: The Associated Press reports, “But White House officials stressed that President Bush remains opposed to raising taxes."

So, while the Administration says tax increases and/or benefit cuts are the only solutions, they again propose only benefit cuts as the solution. To suggest that there are only “differences over personal accounts and taxes” (implying people agree on the need for benefit cuts) does not reflect the political reality.

Resurrects Privatization. The report makes it clear the Administration is interested in resurrecting privatization. However, rather than addressing it directly, the report uses “prefunding” as the code-word for privatization.

Issue Brief Statement: “Fairness to Future Generations Requires True Pre-Funding” and “Only if pre-funding is ‘real’ can this goal of fairness be achieved.

This is the setup to Social Security privatization. Remember when the White House renamed private accounts as “personal” accounts? The American people still understood this was the privatization of Social Security and they rejected it. The new buzz-word (for the same thing) appears to be “pre-funding”. Changing the terminology doesn’t change the fact that the political goals remain the same.

The Administration is merely resurrecting its arguments for privatization and laying the groundwork for President Bush’s plan for so-called progressive price-indexing of Social Security benefits, a plan which would cut benefits drastically affecting 70 percent of future retirees.

by Barbara B. Kennelly, President/CEO

Not surprisingly, the insurance industry’s million dollar ad and lobbying campaign is paying off on Capitol Hill and it appears a Congressional compromise to re-authorize SCHIP won’t include needed reforms to Medicare.

Congress Daily summarizes the closed-door negotiations and Speaker Pelosi’s comments afterwards:

House Speaker Pelosi said “We are working on agreements between [the] House and Senate to take two proposals to our respective caucuses in order to see where we go from here." House leadership sources speculated she was referring to breaking the House measure into separate Medicare and SCHIP bills to avoid confronting the Senate with the House Medicare funding language, which Senate negotiators have called a poison pill.

Of course, the President promises a veto of anything other than his proposal anyway so that’s no small part of the political calculations here.

Both the Medicare overpayments to private plans and the doctor’s fix appear destined for “to be determined later” status. The Health Care Policy and Marketplace Review’s latest posts on this can be found here and here.

According to a new GAO report, that’s the estimated price tag for the President’s failed Social Security Privatization Road Show two years ago. Most of those taxpayer dollars... $437,887...were spent for Air Force One and Air Force Two to shuttle the promoters in chief to 40 cities nationwide with another $370,000 in travel costs for Executive Office staffers. The kicker here is the GAO acknowledges these numbers probably aren’t complete...

“We could not test the validity of some of those costs because (the Executive Office of the President) withheld certain key information and Treasurydid not have supporting documentation for amounts it reimbursed EOP,’’ Comptroller David Walker wrote in the letter summarizing the review. “ We are, therefore, unable to provide reasonable assurance that the costs reported to us are complete and fully supported.’’

We can only imagine what the finally price tag would have been had the American people not made it abundantly clear that the more the President talked about his Social Security privatization scheme...the less they liked it. Too bad he didn’t figure that out a million dollars or so earlier.

The Swamp also has a good discussion of the GAO report.

The differences between Senate and House members trying to negotiate a compromise in their legislation to reauthorize and improve access to healthcare for children, SCHIP, remain. That, in our opinion, is a good thing. Not because we like gridlock but because this legislation is too important to seniors and children alike to take the easy way...which is to ignore the difficult issues tackled in the House bill but absent in the Senate version.

The House bill, called CHAMP, includes desperately needed reforms to private Medicare Advantage plans and is by far the better piece of legislation. Money currently being used to overpay insurers would go to improve health insurance access to children. More than a fair trade. Thankfully, House leaders are sticking to their guns...so far. Congress Daily describes yesterday’s closed door meeting this way:

"Senate Majority Leader Reid, House Majority Leader Hoyer, Senate Finance Chairman Baucus, and House Energy and Commerce Chairman Dingell attended the meeting in House Speaker Pelosi's office to discuss how to approach a conference report that would merge the bills. They made no decisions. 'We've got to find out how close are we. We know how far apart we are just without talking,' Rangel said. 'They cannot make commitments on their side, and we damn sure can't on ours, to say that we're compromising when we don't even know where we are.' From Rangel's perspective, ripping apart the House package might threaten its majority support. 'We put the baby together, and we made the baby with [Energy and] Commerce Committee and the Ways and Means committee, our caucuses, liberals, Democrats, pro-tax, anti-tax, cigarette people. We put this child together. And to split the child in half is very, very difficult to sell it to the parents,' he said."

While every major seniors and health advocacy organization (including the AMA and AARP) supports cutting millions in outrageous overpayments to private MA insurance companies and using that savings to improve insurance access for children...you can see just how much influence the insurance lobby still has on Capitol Hill...

“Before the meeting, Baucus said it would be very difficult to get the needed 60 votes for a conference report in the Senate if any Medicare provisions are added. Several Republican supporters of the Senate bill say they will not tolerate cuts to private Medicare Advantage programs that are part of the House bill.” Congress Daily AM, Sept 7, 2007

So in short, some in the Senate just "won’t tolerate" cuts to private plans which pay private insurers about $1,000 more than Medicare receives for the same beneficiary. They "won’t tolerate" cutting industry subsidies which will cost taxpayers $149 billion dollars over the next decade and cuts two years from Medicare’s solvency. And let’s not forget the extra $24 a year every Medicare beneficiary is paying to cover these subsidies...whether they’re in a private plan or not.

Clearly, the insurance industry does not want to lose the MA gravy train and it's lobbying hard to protect the sweetheart deal it wrote and passed through Congress in the 2002 Medicare Privatization...oops, we mean Modernization...Act.

That’s why we say in this instance...differences are a good thing. And we urge Senate to find the same courage their colleagues showed in the House and support SCHIP legislation that considers what’s best for children and seniors alike.

No doubt, you’ve seen AHIP’s (America’s Health Insurance Plans) television ads designed to scare seniors into believing that cutting millions in industry subsidies is somehow the same as cutting Medicare. This weekend, their president penned a letter to the Washington Post continuing the intergenerational war refrain, which has become a popular marketing ploy used by the Bush administration whenever it wants to scare one age group or the other.

If you want to get beyond the rhetoric, check out Robert Laszewski’s post today at the Healthcare Policy and Marketplace Review blog. He contrasts AHIP’s main points with the truth, such as:

“The Congressional Budget Office predicts that 3 million seniors—mostly rural Americans—will lose their Medicare Advantage coverage altogether if the House bill becomes law.” I am sure that is right. But the CBO is right more because the plans that have been gaming the Private Fee For Service payment system won’t any longer be able to do it and will leave those markets.

And then the big one: “There’s no justification for pitting children against seniors.” Damn right. So, why are you making this into a kids versus seniors issue?

Ask Mary Jane, NCPSSM Contributor: Mary Jane Yarrington, Senior Policy Analyst