Posts Tagged ‘social security’

Aging Population Stresses Medicare

Tuesday, May 1st, 2012

The aging population as millions of baby boomers turn 65 and a slowly recovering economy are stretching the long-term finances of Social Security and Medicare.

Soaring healthcare costs have put Medicare in a worse position than Social Security.  But both programs are likely to become insolvent in the coming decades, unless Congress takes action.  In 2011, the trustees projected the Medicare hospital insurance fund would run out of money in 2024.  Social Security’s retirement fund was projected to dry up in 2038, while the SSDI (Social Security Disability Insurance) fund was projected to be empty by 2018. Revised projections provided a more ominous assessment of the disability program, which has seen growth in applications as more disabled workers lose jobs and apply for benefits.  The non-partisan Congressional Budget Office said the disability fund will run out of money in 2016.  Social Security’s trustees have asked Congress to strengthen the disability system by reallocating money from the retirement program.  There is precedent for this since lawmakers did the same thing in 1994.

If the Social Security and Medicare funds ever run out of money, both programs would collect only enough money in payroll taxes to pay partial benefits.  “I don’t know how to make it clear to the public, but in my mind the sirens are going off,” said Mary Johnson, policy analyst for the Senior Citizens League. “I wouldn’t say we’re under attack, but we are in a very, very serious position.”

Tax revenues have started to rebound but they are still below pre-recession levels.  Also, this year’s cost-of-living adjustment (COLA) was much higher than the trustees projected it would be.  Last spring, the trustee’s projected that Social Security recipients would get a benefit increase of 0.7 percent for this year, but higher-than-expected inflation pushed it to 3.6 percent.  That was good news for seniors but it drained more resources from the system.

The trustees overseeing the programs include Treasury Secretary Timothy Geithner, Labor Secretary Hilda Solis, Health and Human Services Secretary Kathleen Sebelius and Social Security Commissioner Michael Astrue.  More than 56 million retirees, disabled Americans, spouses and children collect Social Security.  The typical retirement benefit is $1,232 a month; the average benefit for disabled workers is $1,111.

According to Geithner, the trustees’ reports demonstrate a real need for Congress to make substantial changes to entitlement programs, although he continues to oppose Republican proposals to partially privatize Medicare.  “We will not support proposals that sow the seeds of their destruction in the name of reform, or that shift the cost of healthcare to seniors in order to sustain tax cuts for the most fortunate Americans,” Geithner said.  Last year, the trustees said that the Patient Protection and Affordable Care Act (ACA) would extend the life of the Medicare trust fund — a point that Geithner emphasized.  According to Kaiser Health News, “One of the most important things we can do right now to preserve Medicare is to implement the Affordable Care Act fully and effectively.” Geithner said.  “Still, more needs to be done.”

The positive news for Medicare is that the pace of cost increases has eased a bit. “The trends in Medicare are more modest than the cost increases we have seen in the private commercial sector,” said economist David Blitzer, who administers Standard & Poor’s index of healthcare costs.  “But both Medicare and the commercial sector face rising cost pressures no matter what, and they seem to come from virtually all directions.”

Medicare sets prices on take-it-or-leave-it terms for hospitals and doctors, who complain it doesn’t pay them adequately.  That causes them to charge privately insured patients at higher rates.  Some experts say the longer Congress waits to act on the two programs, the more difficult it could become to make effective changes.  If Congress acts quickly, it can phase in changes over time, perhaps sparing current retirees while giving those closing in on retirement time to prepare.  Unfortunately, Washington has had difficulty making tough political choices that involve raising taxes, cutting benefits or some combination of both.  Advocates for seniors oppose benefit cuts, noting that Social Security’s finances are secure for decades.

“No one is saying you don’t have to maintain it,” said Eric Kingson, co-chair of the Strengthen Social Security Campaign and professor of social work at Syracuse University.  “What I worry about is reducing the benefit structure or radically changing the system.”  Kingson believes that Social Security can be shored up by simply increasing the amount of wages subject to Social Security taxes — an idea that the majority of Republicans in Congress oppose.  Social Security is financed by a 6.2 percent tax on an individual’s first $110,100 in wages and is paid by employers and workers.  Congress temporarily reduced the tax on workers to 4.2 percent for 2011 and 2012; the program’s finances are being replace through increased government borrowing.  The Medicare tax rate is 1.45 percent on all wages, paid by employees and workers.

ACA’s Future Unclear As It Celebrates Its 2nd Birthday

Tuesday, April 3rd, 2012

As the Patient Protection and Affordable Care Act (ACA) celebrates its second birthday, the Obama administration reminded senior citizens – one of the most reliable voter blocs — exactly how much healthcare reform has helped them.  Coverage of the “donut hole” in prescription drug plans saved five million seniors and disabled people $3.2 billion.  According to data from the Centers for Medicare and Medicaid Services (CMS), through the first two months of 2012, roughly 103,000 Americans saved $93 million in the donut hole.  “Without the healthcare law, more than 5.1 million seniors would have faced $3.2 billion in higher drug costs,” Health and Human Services Secretary Kathleen Sebelius said.  The donut hole is a gap in coverage for prescription drugs under what is called Medicare Part D.  Part D covers 75 percent of the cost of prescription drugs until total medication spending for the patient hits $2,800.  Then the hole opens, and seniors must pay out of pocket until they have spent $4,550.  After that, Medicare pays about 95 percent of drug costs.

The ACA sent all seniors who hit the prescription drug donut hole a one-time $250 check.  In 2011 and 2012, seniors in the donut hole receive a 50 percent discount on brand-name drugs.  Additionally seniors covered by traditional Medicare received wellness check-ups and screenings for diseases like cancer and diabetes without paying anything out of pocket.  Under the law, the donut hole phases out in 2020.

The seniors’ lobby AARP launched its largest-ever outreach effort with ads and town-hall meetings aimed at defending Medicare and Social Security.  “We’re not leaving it up to chance” that the public hears about the law’s benefits, congressional Seniors Task Force co-chairwoman Jan Schakowsky (D-Ill.) said.  Democrats, Schakowsky said, have made it a “primary organization effort”…”to tell the truth (about the law) over the next several months.”

Writing in The Hill, Julian Pecquet says that “Democrats see the Ryan budget, which is expected to propose replacing Medicare with subsidies for people to buy insurance, as political gold ahead of the November election.  Republicans for their part will spend the week hammering the law’s ‘broken promises’ — higher premiums, employers dropping coverage and the soaring cost of insurance subsidies when compared to the earlier budget window Democrats highlighted when they were debating the law two years ago.  They’re also arguing that the healthcare law hastens Medicare’s insolvency by removing $500 billion from the program to pay for what they call an unsustainable new entitlements.”

In terms of implementing the law to meet the 2014 deadline, the ACA leaves it up to the states to set up health insurance exchanges.  In states that refuse to do that, HHS has the authority to create a federal exchange as a backup — but it could be stretched thin if it has to cover too many states.  At the moment, a number of states are not making plans and the federal exchange could end up covering as many as 15 to 25 states.

Other states are biding their time depending on the outcome of the Supreme Court case — and the elections — to decide what to do next.  There’s an excellent possibility that many of them won’t be far enough along by January of 2013, when HHS has to either certify the states’ exchanges or prepare to run a federal exchange in those states.  HHS has already extended the deadline for states to apply for the grants that will help them run exchanges.  And it’s taking other steps to help states that won’t be ready in time.  But if a lot of states refuse to create the exchanges –and more time won’t help them — HHS will be forced to act.

White House spokesman Jay Carney told reporters that President Obama is looking beyond past battles. “He is focused on a forward agenda right now, and working with Congress and doing the things he can through executive action to grow the economy and create jobs,” Carney said.

Republican leaders, who once accused the president of focusing too much on healthcare and not enough on jobs, now say the White House is moving away from the ACA because of uncertainty over whether or not its individual mandate is constitutional.  In terms of the upcoming Supreme Court oral arguments, Senator Roy Blunt (R-MO) said “I think we’ll win in the end.  Now the question is how long is it until the end.  There’s no question that the president’s plan will not work.”

A differing opinion was offered by Democratic Caucus Vice-Chairman Xavier Becerra (D-CA).  “I think as time goes by more and more people are beginning to support the reform because it starts to apply to them.  The more people see what the ACA does, the more they’re going to like it.”

The Supreme Court Takes on the ACA

Tuesday, March 27th, 2012

As the Supreme Court begins three days of hearing about the constitutionality of the Patient Protection and Affordable Care Act (ACA), Americans have mixed feelings about President Barack Obama’s signature healthcare overhaul.  The individual mandate is extremely unpopular, despite the fact that approximately 80 percent of Americans have healthcare coverage through workplace plans or government insurance such as Medicare and Medicaid.  When the insurance obligation kicks in, the majority of Americans won’t need to buy anything new.  The bottom line appears to be that Americans object to being told how to spend their money, even if it solves the dilemma of the nation’s more than 50 million uninsured.  One critic dismissed the individual mandate by saying “If things were that easy, I could mandate everybody to buy a house and that would solve the problem of homelessness.”

Listen to Republicans describe the law as an attack on personal freedom, and you’d be surprised to learn that the idea originated with them.  Its model is the Massachusetts law enacted in 2006 when Mitt Romney was the governor.  Former House Speaker Newt Gingrich supported an individual mandate as an alternative to President Bill Clinton’s healthcare proposal, which put the burden on employers.  All four GOP candidates have promised to repeal the Affordable Care Act, which they describe as “Obamacare.”  Former Senator Rick Santorum (R-PA) terms it “the death knell for freedom.”

President Obama and congressional Democrats passed the mandate in 2010, without Republican support, in an effort to create a fair system that assures that all Americans — whether rich or poor, young or old — get the healthcare they need.  One thing that proponents point out is that other economically advanced countries have succeeded at it.  Congress determined that when the uninsured visit a clinic or the emergency room, the care they can’t afford costs roughly $75 billion a year.  A large percentage of that cost ends up adding $1,000 a year to the average family’s insurance premium.

In legal briefs challenging the law, opponents contend that the “minimum coverage requirement” — known as the individual mandate — would set a precedent that could apply to literally anything.  If it’s legal for Americans to be told to buy health insurance, Congress could try to impose “a broccoli mandate, a car-purchase mandate, really any other mandate that you’d want,” said Ilya Somin, a law professor at George Mason University.  “There are lots of interest groups that would love to lobby Congress to require people to buy their products.”

The mandate is intended to ensure that new insurance market reforms in the law work as intended.  Unless younger, healthier people — who often don’t purchase insurance until they get sick — are covered, the costs of those changes would be exorbitant.  In response to opponents’ admonitions that a mandate to buy insurance could lead to other government-required purchases, the Obama administration argued that no such examples exist.  “Respondents acknowledge that states do have the power to enact purchase mandates, but they identify no example of any state ever having compelled its citizens to buy cars, agricultural products, gym memberships or any other consumer product,” according to the Obama administration.

Not surprisingly, 73 percent of Americans believe that the Supreme Court will be influenced by politics when it rules on the constitutionality of the ACA.  The attitude crosses party lines and is particularly popular with independent voters, of whom 80 percent believe that the court will not base its ruling strictly on its legal merits, according to a Bloomberg National Poll.  Seventy-four percent of Republicans and 67 percent of Democrats believe that politics will be a determining factor in the court’s healthcare decision.

“I always worry when the court steps into the political thicket,” said Barbara Perry, a Supreme Court scholar and professor at the University of Virginia in Charlottesville.  “It does so at its peril.”  The justices themselves say that politics doesn’t impact their decisions.  “It is a very serious threat to the independence and integrity of the courts to politicize them,” Chief Justice John Roberts said at his 2005 Senate confirmation hearing.  Justice Stephen Breyer told Bloomberg News that politics doesn’t influence the court, even in cases with electoral implications.  “It would be bad if it were there,” he said.  “And I don’t see it.”

In reviewing the ACA, the Supreme Court is entering territory that it hasn’t approached since the days of Franklin Delano Roosevelt: ruling on a president’s signature legislative victory in the midst of his re-election campaign.  Justices are taking more time to listen arguments — six hours over three days — than any other case in the last 44 years.   “This is a central challenge to the modern Constitution, which was fashioned during the New Deal and then elaborated further during the civil rights revolution,” said Bruce Ackerman, a professor at Yale Law School in New Haven, Connecticut and author of The Decline and Fall of the American Republic.  “This goes to the very foundations of modern American government.”

The closest comparable was 76 years ago, involving Roosevelt’s New Deal, a response to the Great Depression.  It wasn’t a single piece of legislation and included the creation of Social Security.  The court ruled against parts of the New Deal, while leaving others in place.  The principal decision came when the court struck down much of the National Industrial Recovery Act, which allowed industries to create trade associations that set quotas and fixed prices.

Those wishing to tune in and watch the excitement are destined to be disappointed. The Supreme Court will make available same-day audio of the oral arguments.  In its announcement, the court said it is making the audio available because of the “extraordinary public interest” in the case.

Mitt Romney Says “No” to Medicare on His 65th Birthday

Monday, March 19th, 2012

Even though he just celebrated his 65th birthday, GOP presidential hopeful Mitt Romney isn’t signing up for Medicare or Social Security.  According to an aide, Romney plans to keep his private health insurance plan although there is no word on whether he accessed that plan through a former employer or bought it on the individual market.  Ironically, if elected, Romney wants to offer senior citizens the choice of enrolling in the traditional program or purchasing private insurance with some financial help from the government.

Romney’s decision puts him in a tiny minority. The vast majority of seniors participate in Medicare.  Nearly all seniors are automatically enrolled in Medicare Part A, which covers hospital care, although they can opt not to use it.  Another 95 percent enroll in Medicare Part B, which covers physician services, according to the Kaiser Family Foundation.

“It was personally meaningful in me to be enrolling in the program I ran.  It made me feel one step closer to the beneficiaries,” Dr. Donald Berwick, who left his post at the Centers for Medicare and Medicaid Services (CMS) at the end of 2011, said.  “It validated what I had thought — which was that it was remarkably easy [to sign up].  Any president, at any age, should be committed to these important programs,” Berwick said.

By contrast, two of Romney’s competitors — Newt Gingrich and Ron Paul — are already 65, the age at which most Americans become eligible to enroll in Medicare’s coverage of hospital treatment, physician visits and other medical care, including prescription drugs.  Gingrich has a Medicare Advantage plan, administered by Blue Cross Blue Shield, according to his campaign.  Medicare Advantage plans are run by private insurance companies, who receive a fixed monthly payment from the federal government.  Gingrich frequently plugs Medicare Advantage and wants to expand the proportion of seniors who enroll in it from the current 25 percent.  Congressman Paul has a federal government-sponsored Blue Cross Blue Shield employee health insurance plan.  He has said that he would not change any aspect of Medicare for current beneficiaries but would let younger people opt out of the program and use medical savings accounts or other ways to pay their own healthcare costs.

According to NPR’s Julie Rovner, “Romney is clearly making a political point.  Wealthy people like him ought to pay more for their Medicare benefits (if they get them at all) and that perhaps 65 is a little young to qualify, too.  ‘Wealthier seniors will receive less support,’ under the changes Romney has proposed for Medicare, according to his website. http://www.mittromney.com/issues/medicare At the same time, he is proposing to ‘gradually raise the retirement age to reflect increases in longevity.’  But could his political point cost him more down the road if he changes his mind?  Maybe.  Medicare charges penalties for those who wait to sign up.  It’s the program’s way of ensuring that people don’t wait until they get sick to enroll.”

Beneficiaries currently have a seven-month window to sign up for Medicare: three months before their birth month, the month of their birthday, and three months after their birthday.  That means that Romney has through June to enroll if he changes his mind.  The majority of adults use the Social Security Administration website to enroll for their benefits, while others go to local district offices.

Writing for the Huffington Post, Ethan Rome, Executive Director of Health Care for America Now, says that “I’m not sure what Romney’s trying to prove, but what his action says is clear: I’m not like the Americans who enroll in Medicare.  I’m special.  I’m rich.  I’m better than you.  Ask yourself: If Romney doesn’t need or want Medicare for himself, will he protect it for the rest of us who do?  Of course not.  Instead, he’ll continue to support the Republican plan to eliminate Medicare as we know it.  He’ll work to turn Medicare into a voucher program that will saddle seniors with thousands of dollars in out-of-pocket health care costs.  Because, after all, what senior can’t afford to spend an extra $6,400 a year on doctors and hospitals?  Before Medicare, seniors were left at the mercy of the private market and therefore virtually uninsurable.  Without insurance, even brief hospital stays could impoverish them.  The result was that the elderly went without the care they needed — unless their families were rich.  Most seniors were one illness away from bankruptcy.”

Medicare Times Are a Changing

Monday, January 16th, 2012

Baby boomers may not like it — and whoever wins the White House this year — but the Medicare that our parents knew and love is destined to change. And it’ll be like it or lump it.

With more than 1.5 million baby boomers enrolling in Medicare every year, the program’s future is one of the most crucial economic issues for anyone who currently is 50 or older. Healthcare costs are the most erratic part of retirement expenses, and Medicare remains a great deal for retirees, who often get benefits worth significantly more than the payroll taxes they paid while working.  “People would like to have what they used to have.  What they don’t seem to understand is that it’s already changed,” said Gail Wilensky, a former Medicare administrator. “Medicare as we have known it is not part of our future.”

Consider these numbers.  Medicare’s giant trust fund for inpatient care is expected to run out of money in 2024.  When that happens, the program will collect only enough payroll taxes to pay 90 percent of benefits.  Additionally, researchers estimate that as much as one-fifth and even two-thirds of the more than $500 billion that Medicare now spends every year is spent on treatments and procedures of little or no benefit to patients.

Representative Paul Ryan (R-WI), chairman of the House Finance Committee, is leading the charge on changing Medicare.  Ryan’s current proposals will not impact people now 55 or older would not have to make any changes.  But how would it work?  Would it save taxpayers’ dollars?  Would it shift costs to retirees, who are least able to afford it?   Will Congress ultimately end traditional Medicare?  These questions are still waiting for answers.  “I’m not sure anybody has come up with a formula on this that makes people comfortable,” said health economist Marilyn Moon, who formerly served as a trustee overseeing Medicare finances.

The White House’s preference is to keep the existing structure of Medicare while “twisting the dials” to control spending, said Medicare trustee, economist Robert Reischauer of the Urban Institute think tank.

Ryan’s original approach would have put 100 percent of future retirees into private insurance.  His most recent plan, written with Senator Ron Wyden (D-OR), would keep traditional Medicare as an option, competing with private plans.

Writing for AARP, Ricardo Alonzo Zaldiver says that, “This could mean more Medicare recipients joining private insurance plans (currently, only about 25 percent of Medicare recipients are in private ‘Medicare Advantage” plans, while the other three-quarters participate in the traditional, government-run Medicare program).  A new voucher-for-private-Medicare plan would be available to anyone currently under 55.

“It could also mean keeping the existing Medicare structure but making certain tweaks to control spending.  Under President Obama’s healthcare overhaul, the Independent Payment Advisory Board could force Medicare cuts to service providers if costs rise above certain levels and Congress fails to act.  Obama has said he’ll veto any plan to cut Medicare benefits without raising taxes on the wealthy.  During failed budget negotiations last summer, he indicated a willingness to gradually raise the Medicare eligibility age to 67, revamp co-payments and deductibles in ways that would raise costs for retirees, and cut payments to drug makers.  ‘For the 76 million baby boomers signing up over the next couple of decades, it will pay to be watching.’”  President Obama has promised that he will veto any plan to cut Medicare benefits without raising taxes on the wealthy.

The Chicago Sun-Times offers this sage advice: “Fix Medicare, ignore scare talk.”  According to writer Steve Huntley, “I’ve contributed to Medicare every year of its existence. Yet, it’s a myth that seniors have paid the costs of their Medicare services, as demonstrated by the research of economists Eugene Steuerle and Stephanie Rennane of the Urban Institute think tank.  Their study showed that a two-income couple earning $89,000 a year would pay $114,000 in Medicare taxes during their careers but could expect to receive $355,000 in medical care in retirement. They could get prescriptions, doctor visits and hospital services valued at three times their contribution to Medicare.

“Medicare combined with Medicaid and Social Security add up to an entitlement time bomb —  they’ll consume all tax revenues by 2052, according to a Heritage Foundation analysis —  for the people who’ll be stuck with the bill: working Americans.  In 1950, there were 16 taxpaying workers for each retiree; by the time the baby boomers all retire, there will be two workers for each retiree. Entitlement reform has to happen.”

90-Year-Olds Growing in Numbers

Tuesday, November 29th, 2011

Is 90 the new 85? The number of Americans over the age of 90 has skyrocketed from 720,000 in the year 1980 to more than 1.9 million in 2010, according to the Census Bureau, which notes that “over the next four decades, this population is projected to more than quadruple.”  Driven by improvements in healthcare, the trend presents challenges.  The Census Bureau notes that “a nation’s oldest-old population consumes resources disproportionately to its overall population size, and its growth has a significant impact on societal and family resources, including pension and retirement income, healthcare costs, and intergenerational relationships.”

According to the study, “People at very old ages are also expected to live longer.  Today a person 90 years of age is expected to live on average another 4.6 years (versus 3.2 years in 1929–1931), and those who pass the century mark are projected to live another 2.3 years.  Women aged 90+ outnumber 90+ men nearly 3 to 1.”

The downside is that people aged 90-plus are more likely to live in poverty or have disabilities, creating a new challenge to already strained retiree income and healthcare programs.

Richard Suzman, director of behavioral and social research at the National Institute on Aging, said “A key issue for this population will be whether disability rates can be reduced.  We’ve seen to some extent that disabilities can be reduced with lifestyle improvements, diet and exercise.  But it becomes more important to find ways to delay, prevent or treat conditions such as Alzheimer’s disease.”

“Given its rapid growth, the 90-and-older population merits a closer look,” said Wan He, a Census Bureau demographer and one of the report’s authors.  “The older people get, the more resources they consume because of healthcare, and disability rates significantly increase.  This creates demands for daily care, and for families the care burden increases dramatically.”

People in this demographic are more likely to have at least one disability, live alone or live in a nursing home.  They’re also more likely to be female, because women typically are longer-lived than men, and are likely to be poor.  “But increasingly people are living longer and the older population itself is getting older.  Given its rapid growth, the 90-and-older population merits a closer look.  The implications for the family and our society of this growing population are likely to be significant,” according to the authors.

The poverty issue cannot be understated because it becomes more likely as a person ages.  From 2006 to 2008, 14.5 percent of people 90 and older lived in poverty, drastically more than the 9.6 percent of those 65 to 89 who were considered poor.  The annual median income for people aged 90 and older was $14,760, as measured in inflation adjusted dollars.  Nearly half of that income — 47.9 percent — came from Social Security, and 18.3 percent came from retirement pensions.  Fully 92.3 percent of those 90 and older received Social Security income.

And where do these nonagenarians live? According to Census figures, smaller states had the highest shares of their older Americans who were at least 90.  North Dakota had approximately seven percent of its 65-plus population older than 90.  It was followed by Connecticut, Iowa and South Dakota.  When considering absolute numbers, the retirement havens of California, Florida and Texas led the nation in the 90-plus population, each with more than 130,000.

By 2050 – just 39 years from now – the number of Americans 90 or older could total nine million. “I think it’s going to grow even faster than predicted in the report,” Suzman said.  Someone who lives to 90 today is likely to live almost another five years, the study noted.  Additionally, a person who lives to celebrate a 100th birthday is likely to live another 2.3 years.  Women aged 90 and older outnumbered men by 3 to 1, according to the study.  Nearly 80 percent of those women are widows, while more than 40 percent of the men are married.

Edmund H. Duthie, a professor of medicine and chief of the division of geriatrics and gerontology at the Medical College of Wisconsin, said the census numbers point to a sobering fact: Retirement may be longer than people expect.  “Are you going to outlive whatever you put aside?”  Duthie said.  “Most people wouldn’t think that if you retired at 60, you may have a third of your life to live.”  Duthie said it was unclear how the nation’s obesity epidemic might affect longevity as well as chronic illness.  America, he said, remains concerned with rates of dementia and how society will cope with the problem.  “The science base of what we do with the oldest old is something that we’re lacking,” he said.  “We can measure cholesterol and blood pressure, but what does it mean in a 90-year-old?  We need to be enrolling these oldest old in studies to understand more about what to do.”

Medicare Part B Premiums To Rise Slightly in 2012

Monday, November 7th, 2011

Despite rumors to the contrary, the basic monthly premium for Medicare will be less than anticipated in 2012.  The new Part B premium, which covers outpatient care, will be $99.90 a month for 2012, approximately $7 less than projected as recently as May.  In other words, the majority of senior citizens will pay $3.50 more a month next year, instead of $10.20, as forecast earlier.  Some younger retirees who enrolled recently will actually see their rates go down.  They have been paying as much as $115.40 a month.  Instead, they’ll also pay $99.90 next year.  The primary reason for the lower-than-expected premiums is a result of the interaction between Social Security cost-of-living adjustments (COLA) and Medicare.

“Thanks to the Affordable Care Act (ACA), Medicare is providing better benefits at lower cost,” said Health and Human Services Secretary Kathleen Sebelius.  She reassured seniors that they have nothing to fear from the healthcare law, and described keeping premiums in check as “pretty remarkable.”

Some Republicans do not see the connection between Medicare premiums and the ACA.  “Lower Medicare premiums are being driven by lower-than-average Medicare spending due to the slow economy” – not the healthcare law, said Antonia Ferrier, spokeswoman Senator Orrin Hatch (R-UT), the ranking Republican on the panel that oversees Medicare.

Part B premiums have been frozen at the 2008 level of $96.40 a month for about 75 percent of Medicare beneficiaries because of a lack of a Social Security COLA during the recession.  Social Security recently announced a raise of an average of $39 a month for 2012.  The Part B premium is of great interest to the 48 million people covered by Medicare.  Average premiums for prescription coverage and for popular Medicare Advantage plans will stay flat or dip slightly for 2012, but fewer beneficiaries opt for those benefits.  In May, government experts forecast that Medicare premiums would rise to $106.60 for 2012.  At that time, they were also estimated a Social Security COLA of just 0.7 percent – but it turned out to be a larger 3.6 percent increase.  As a result, rising Medicare costs could be spread among many more people, resulting in smaller individual increases.

Thanks in part to the Affordable Care Act, people with Medicare are going to have more money in their pockets next year,” added Donald Berwick, MD, administrator of the Centers for Medicare & Medicaid Services (CMS).  “With new tools provided by the Affordable Care Act, we are improving how we pay providers, helping patients get the care they need and spending our healthcare dollars more wisely.”

Advocates for senior citizens also were pleased with the smaller rise in Medicare Part B premiums.  “The payment reforms enacted over the past few years, including those in the Affordable Care Act, in addition to crackdowns on fraud, waste and abuse, are partially responsible for the increased optimism about Medicare’s financial health, the lower-than-predicted Part B premium and an almost unheard-of drop in the Part B deductible,” said Joe Baker, president of New York-based Center for Medicare Rights.  “These developments help show the promise of the ACA’s delivery system reforms, and why we must let them do their job in the coming years.”

AARP echoes that sentiment.  “Millions of America’s seniors are struggling with higher expenses – particularly higher healthcare costs, lower incomes, depleted savings and reduced home equity or homes lost to foreclosure, and this small increase is welcome news,” noted David Certner, AARP’s legislative policy director.

Writing in Family Practice News, Alicia Ault takes issue with the way HHS is tying the low increase to healthcare reform.  According to Ault, “Part B premiums are calculated to cover one-fourth the cost of physician services, plus a contingency margin that is essentially equivalent to an insurer’s reserve.  This has nothing to do with health reform; it’s been a statutory requirement since, well, for a long time. And the contingency margin is always dependent on what happens with the Sustainable Growth Rate (SGR) formula.  CMS assumes every year that the SGR will be overturned, so that calculation also has nothing to do with health reform.  For an administration that prides itself on transparency, it seems to have done little today to pull back the curtain on Medicare spending — even as Dr. Berwick said that transparency itself had led to lower costs.”

Social Security Disability Income Under Fire From Budget Cutters

Wednesday, September 7th, 2011

Although some people are convinced that federal Supplemental Security Disability Income (SSDI) program for severely disabled children is a boondoggle, a four-year-old boy diagnosed with severe ADHD is an excellent example of how the program works.  The boy’s case workers said there wasn’t much they could do for him.  “We were at a standstill,” said the boy’s mother, who was barely scraping by as a single parent of two.  When doctors recommended she enroll her son in the SSDI program, her situation quickly improved.   A $674 monthly payment helps pay for her son’s day care, a private tutor and medications.  Most importantly, SSDI made the boy eligible for Medicaid, which provided access to the doctors he needed. 

“I can see a light in his eyes again,” according to the mother.  “He just looks so much happier.”  The SSDI program for children is expanding rapidly, with the largest increase among kids with mental, behavioral and learning disorders, including ADHD, speech delays, autism, and bipolar disorder.  

Even though the program benefits children in need, it is generating Congressional criticism.  The Boston Globe created a backlash that called the children’s SSDI program “The Other Welfare” and followed several families whose children’s eligibility for the program was open to discussion.  Several of the families believed that they had to medicate their children with psychotropic drugs in order to qualify for the benefit.  The series spurred Representative Geoff Davis, (R-KY), Representative Richard E. Neal, (D-MA), and Senator Scott Brown, (R-MA), to ask for an investigation by the Government Accountability Office (GAO), which is expected to be released by the end of the year.  In a letter to the GAO, the three lawmakers expressed concern about “recent reports in the media and elsewhere” that “have identified potentially alarming practices…(that raise) numerous concerns, including the potential for fraud and abuse in the program.”  Some Congressmen are not waiting for the GAO study results and have twice proposed limiting SSDI benefits.  The House budget resolution proposed that the government could save $1.4 billion over 10 years by reducing incentives in the SSDI program “for parents to place their children on medication solely to receive SSI benefits.”  

Advocates for children have rallied against the potential cuts.  The largest advocacy groups, including the Bazelon Center for Mental Health Law, the American Psychiatric Association, the American Academy of Pediatrics, and Children and Adults with Attention Deficit/Hyperactivity Disorder, have formed a coalition to protect the SSDI program for kids and are lobbying Congress.

 At present, SSDI provides cash assistance and Medicaid to the families of 1.2 million low-income kids who have severe disabilities, at a cost of $10 billion a year.  The program has grown by nearly 40 percent over the last nine years.  “Cutting the SSI program could have disastrous consequences for families, many of which already are struggling well below the poverty line,” according to Rebecca Vallas, a lawyer with Community Legal Services, a non-profit that is part of the coalition.  Vallas says the increase in the SSDI program is due to a national increase in child poverty and improved access to healthcare for kids, who get diagnosed earlier and more frequently with disabilities that might otherwise be ignored.

It’s not only kids who benefit from SSDI.   Recently, the Social Security Administration added 12 new conditions to its “compassionate allowances list,” including several heart ailments.  Applicants who have any of the 100 conditions  on the list are fast-tracked and can have a decision as quickly as two weeks.  For other people, the length of the disability process can be measured in months — or even years.  “When you have a catastrophic experience and you lose 50 percent of your income, it can mean that you’re selling your house, that you may not be able to support yourself. That’s so depressing for the patient,” said Karla Robeson.  Social Security is in the process of determining new conditions to add to the compassionate allowances list, though they’re getting more difficult to pinpoint, said Social Security Commissioner Michael Astrue.

Not everyone is supportive of the SSDI program.  Writing on Slate, James Ledbetter, a widely respected financial journalist, says that “They are the recipients of Social Security’s Disability Insurance, a somewhat obscure federal program that nonetheless eats up nearly $200 billion a year.  SSDI began in 1956 and was intended to provide benefits for people between 50 and 64 who’d been in the workforce but had developed ‘any medically determinable physical or mental impairment which can be expected to result in death or to be of long-continued and indefinite duration.’  At the end of the first year, there were 150,000 Americans receiving SSDI benefits.  As Congress serially widened the eligibility criteria — by age, by type and duration of impairment — that number began to grow.  Enrollment hit one million adults in 1966; by the end of 1977 it was 2.8 million; and today it’s more than eight million ex-workers, plus another million disabled adult offspring and disabled widows and widowers.  SSDI represents, as the authors of a 2006 economics journal paper put it, a ‘fiscal crisis.’  Equally distressing, it also represents public policy run amok.  Over the last few decades, a program that was designed to help a relatively small group of people who were fatally sick or permanently unable to work has evolved into a backdoor welfare program in which a huge number of people are paid not to get jobs.  How huge?  Nationwide, we’re talking about well over four percent of the adult population.  In some states — Alabama, Arkansas, Kentucky, Maine, Mississippi, and West Virginia — the rate exceeds six percent.  These millions of workers extricated from payrolls represent untold billions in tax lost revenues and all manner of desperately needed economic activity (consumption, home purchases, etc.).”

Medicare Changes Would Hit Lower-Income Seniors Hard

Tuesday, August 2nd, 2011

At a time when concern about federal deficits and the national debt are growing,  few quarrel with the need to reform Medicare.  The health insurance program for seniors and people with certain disabilities accounts for 15 percent of the federal budget – in third place behind Social Security and defense spending.  That share is rising as healthcare costs continue to rise and more baby boomers retire, threatening the program’s long-term solvency.

Several of the most prominent solutions under discussion largely derive their savings by shifting a greater share of the cost onto beneficiaries.  The plan sponsored by Representative Paul Ryan (R-WI) and passed by the House of Representatives would significantly cut Medicare spending by capping the government’s contribution to the program and transforming it into a system of “premium supports” given to seniors to help subsidize their purchase of private insurance plans, with seniors paying additional costs.  This would double out-of-pocket spending by the average senior to $12,500 each year, according to Congressional Budget Office estimates.

The ability of a majority of seniors to shoulder that burden appears dubious.  Just five percent of Medicare beneficiaries make $80,000 or more, a figure that includes any income from a spouse. For the 47 percent of seniors who are at or close to poverty, on average they are already spending nearly 25 percent of their budgets on healthcare, according to an analysis by the Kaiser Family Foundation.

“There’s this impression that there’s a great deal of wealth among the Medicare population, this image of wealthy seniors playing golf and enjoying their retirement years,” said Tricia Neuman, director of the Kaiser Family Foundation’s Medicare Policy Project.“But while some are lucky to do so, many are living on a fixed income, struggling to make ends meet…with really limited capacity to absorb rising costs.”

According to the Kaiser Family Foundation’s report, raising Medicare’s eligibility to 67 in 2014 would generate an estimated $5.7 billion in net savings to the federal government, but also result in an estimated net increase of $3.7 billion in out-of-pocket costs for 65- and 66-year-olds, and $4.5 billion in employer retiree healthcare costs.  In addition, the study projects that the change would raise premiums by about three percent both for those who remain on Medicare and for those who obtain coverage through health reform’s new insurance exchanges.  The study assumes both full implementation of the health reform law and the higher eligibility age in 2014 in order to estimate the full effect of both the law and the policy proposal.  In the absence of the health reform law, raising Medicare’s age of eligibility would result in an increase in the uninsured, according to other studies, as many older Americans would have difficulty finding affordable coverage in the individual market in the absence of Medicare.  With health reform, virtually all 65- and 66-year-olds would be expected to obtain alternative sources of coverage.”

Healthcare remains a major focus of budget talks on Capitol Hill,Senator Mark Kirk (R-IL) recently told the American College of Surgeons (ACS).  Every group that relies on federal funding should expect a 10 to 20 percent drop in that funding.  When Dr. L.D. Britt, president of the ACS, warned that such cuts could send some healthcare providers into a “tailspin,” Kirk responded that “the tailspin is the U.S. economy.  There is a new audience at play,” Kirk said, referring to U.S. creditors.  “The judgments they render, they are swift and severe.”  Kirk is optimistic that a solution to the country’s debt-ceiling dilemma “will have a way of concluding itself one day before the August 2 deadline.”

Baby Boomers Worry About Their Health, Memory Loss

Monday, July 25th, 2011

Baby boomers are more concerned with the ways that aging impacts their physical and mental health than the role it plays in their appearance.  Fully 65 percent of baby boomers – who are currently between the ages of 47 and 65 — expressed concern with their health, with 26 percent focused on retaining their mental faculties.  Just eight percent mentioned appearance as their biggest aging concern.

Boomers also are slightly less active than the previous generation.  Just 57 percent started a regular exercise program in 2010.  Of those who exercise regularly, 35 percent are walkers.  Nearly 4.3 million adults 50 or older used illicit drugs in the last year, according to a report from the federal Substance Abuse and Mental Health Services Administration.  According to the agency, substance abuse in this age group could create public health challenges over the next decade.

Boomers are in less agreement about whether their longer lives will be better than the previous generation: 49 percent expect a better life than their parents, while another 25 percent believe it will be about the same.  Another 26 percent expect that the quality of their lives will be worse than their parents.

Although younger adults believe that 60 is the start of old age, Baby Boomers strongly disagree.  The median age they cite is 70.  Twenty-five percent of Boomers insist you’re not old until you’re 80.  “In my 20s, I would have thought the 60s were bad, but they’re not so bad at all,” said Lynn Brown, 64, a retired legal assistant and grandmother of 11 living near Phoenix.  Boomers – 77 million strong — are celebrating their 47th through 65th birthdays in 2011.  In general, they are more optimistic about their futures than past generations.  Americans born in the population boom that followed World War II are more likely to be energized about the positive aspects of aging, such as retirement, than worried about the negatives, such as poor health.

The findings that midlifers who are worried about aging are focused more on their health over physical looks may seem surprising to some — but then when you see stunning boomer role models like Susan Sarandon and Helen Mirren, it all makes sense,” said Cindy Pearlman, entertainment writer for the Chicago Sun Times and best-selling author of “The Black Book of Hollywood Beauty Secrets” series, and regular contributor to LifeGoesStrong.com’s Style channel.  “Even in a town like Hollywood, where you’d expect nips and tucks everywhere you turn, many celebrities are saying that the secret to looking great at any age is accepting the inevitable changes that the years bring, while staying in shape and embracing your own sense of style.”

Many baby boomers have no problem working till they’re 65 or 70 as long as they’re not doing heavy lifting. A majority are enthusiastic about aging and have less concerns about physical ailments than their parents’ generation.  Tom Beumont understands that the current status of Social Security will require him to work longer, but he is fine with that.  “We kind of learned from our parents…we have a more diverse background and we also exercise more so that’s more important to us”, Beumont said.

Cindy Black, a nurse, said a lot of the people she sees at a clinic work too much. “I think we are burning the candle at both ends. They went to bed earlier back then and drank more water,” Black said.  Black said that while baby boomers exercise more than their parents and drink and smoke less, their fast paced lifestyle has a price.  According to Black, Boomers might end up working themselves to death, literally.  “They laugh when I tell them this but they need to go to bed by 10 o’clock.”

Baby Boomers are also concerned about their independence. Boomers primarily worry about losing their independence because of illness, while 44 percent are concerned about experiencing memory loss.  Approximately 41 percent have concerns about remaining financially self-sufficient.  The hedonistic Boomer generation forever changed the social scene with the dawning age of the flower child, and the explosion of the sexual revolution during the 1960s and 1970s.

Just 18 percent of Boomers worry about dying, while another 22 percent are moderately concerned about it.  More than two-thirds expect to live to at least age 76, and one in six expects to live into their 90s.