Changing Social Security and Medicare

Expert: President’s budget provides benefits and challenges for seniors

By Mac McLean / The Bulletin

Representatives from one of the country’s largest senior citizens groups have good and bad things to say about President Barack Obama’s most recent budget proposal and the changes it suggests for Social Security, Medicare and other programs that benefit older Americans.

Released Feb. 2, the president’s $50 trillion spending plan for the next 10 years gives Medicare officials the ability to negotiate the price seniors pay for their most expensive drugs and gives the Social Security Administration $1 billion to hire personnel to work at its field offices.

The budget proposal also includes changes that would greatly increase the amount of money future Medicare beneficiaries have to pay in terms of the premiums and deductibles and for certain health care services that many people rely on as part of their care.

“We feel pretty good about it,” said Max Richtman, president of the National Committee to Preserve Social Security and Medicare. “But we are concerned about seniors having to pay more out of pocket (for their medical care.)”

Richtman, whose organization has more than 3 million members and supporters across the country, said he will work closely with U.S. Sens. Jeff Merkley, D-Oregon, and Ron Wyden, D-Oregon, and other members of Oregon’s congressional delegation to soften the blow these changes could have on the state’s 600,000 older residents while making sure the parts of the budget proposal that could help them stay intact.

Social Security

Due to the sequester — a series of automatic spending cuts that went into effect in March 2013 — the Social Security Administration was forced to lay off more than 1,500 temporary employees, cut its overtime and leave unfilled 5,000 positions that came available through attrition and retirement.

Richtman said these cuts proved to be devastating for hundreds of thousands of baby boomers who were getting ready to retire, particularly those who lived in rural areas, because they forced the administration to close many field offices where people could talk to someone about their benefits in person. The administration also cut back its call-center hours, he said, which meant longer hold times for callers.

Richtman said the president’s budget proposal works to address this by giving the administration $1.02 billion to hire staff, reopen some of the offices it closed and extend the hours at other offices. He said this change would be huge for the 10,000 baby boomers who will be turning 65 every day for the next 19 years and others who are planning for their retirements.

“That’s a very positive thing,” Richtman said, explaining people need all the information they can get when planning their retirements because the decisions someone makes at this time can have a huge impact on his life and financial well being.

Richtman was also happy the president’s budget proposal omitted any reference to the chained CPI — a formula used to calculate inflation that could reduce the cost-of-living adjustments Social Security beneficiaries received each year — and included language that would transfer money from the Social Security Retirement Trust Fund to the Social Security Disability Trust Fund so the latter program could stay solvent.

“For us, that’s a little victory if it holds,” Richtman said, hinting that all three of these proposals — particularly the chained CPI — could change as the U.S. Senate and the U.S. House of Representatives came out with their own versions of the president’s budget proposal.

He was less optimistic about how the proposed spending plan dealt with Medicare.

Medicare

More than half the country’s Medicare beneficiaries earned less than $23,500 in 2013, according to the national committee’s research. Low-income Medicare beneficiaries also spent about 23 percent of their monthly Social Security checks on Medicare premiums, deductibles and other health care costs.

With these statistics in mind, Richtman and other members of his group have come out strongly against parts of the president’s budget proposal that would increase the amount of money people pay for Medicare by:

• raising the Medicare Part B deductible by $25 in 2019, 2021 and 2023,

• increasing the surcharge people pay for Medigap, which helps those who cannot afford their Part B premiums get the extra health coverage,

• forcing people who receive home health care to help them recover from an accident or an illness to pay $100 for the service starting in 2019, and

• restructuring the program’s means-testing policy so people who earn $45,600 a year in 2019 would have to pay higher premiums and deductibles.

“That’s a real problem,” Richtman said of this last proposal. “We aren’t talking about your upper income seniors here, we’re talking about making middle-class seniors pay more for their benefits.”

But on the good side of things, Richtman said, the president’s budget proposal includes language that would let Medicare officials negotiate with drug makers the prices people who have a Part D prescription drug plan must pay for certain biological and specialty-tier drugs. The program’s representatives haven’t had this ability since the program was created in 2003.

“That’s a step in the right direction,” said Richtman, who’d like to see this authority expanded so it includes all types of prescription drugs instead of just the most expensive. He also appreciates proposals in the budget plan that would speed up the development of generic drugs and close the “doughnut hole” people face with certain Part D plans within three years.

— Reporter: 541-617-7816, mmclean@bendbulletin.com

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