Make Social Security and Medicare sustainable (and better) through progressive changes, not devastating cuts.
Submitted by Illinoisnoki1 on Thu, 12/27/2012 - 15:15
By Sonja Rotenberg, Chair Illinois Single Payer Coalition 12/27/12
Some Changes Are Good
Republicans and some Democrats want to cut Social Security (even though it does not contribute one dime to the deficit) and Medicare in the name of the “Grand Bargain” ostensibly to lower the country’s deficit and avoid the so-called “fiscal cliff”, a term blown way out of proportion by the business media.
Understandably many liberals and progressive groups as well as others who are concerned about the welfare of seniors, the disabled and those less fortunate do oppose changes to either program. In the current context ‘change’ has come to mean reducing benefits or weakening support.
For example, a frequently discussed change is raising the Social Security retirement age, a change that would cut the program’s already bare-bones benefits. Also under discussion is moving up the eligibility age for Medicare from 65 to 67. This is another regressive change that would cause millions of seniors unnecessary financial and psychological distress.
However, there other types of changes, small improvements really, that would not hurt those depended on these programs, but in fact would strengthen them and reduce the federal deficit as well. We on the left should promote these progressive changes wholeheartedly.
Social Security is funded through payroll deduction taxes that flow into a special trust fund from which benefits are paid. The deficit hawks complain that the Social Security Trust Fund will be short of funds to pay current retiree around the year 2033 and offer their bad changes as solutions. A better and simpler way to shore up the Trust Fund is to improve and extend the revenues of Social Security by lifting the income cap.
Currently, those earning more then $113,000 annually stop contributing to Social Security on earnings above that amount. If we move it to a higher level, such as $250,000, revenues will instantly increase and the trust fund’s life span will be extended for many decades. This was done under Reagan when Social Security Trust fund was running short. It worked well and painlessly. It is a fair and very reasonable change that should be done immediately.
The best solution for improving Medicare is to extend it to all. Improved Medicare for All is the best option to achieve cost-effective, comprehensive and affordable health care to all. In fact, some experts say that a Medicare for All (Single Payer) system would substantially reduce the federal deficit.
In the meantime, there are easy ways to shore up the funding base for the current Medicare program while also improving benefits for those who rely on this program. Here are two:
Let Medicare negotiate drug prices. Medicare is the country’s largest buyer of prescription drugs, but under Medicare Plan D—introduced by President George W. Bush, someone not known for compassion—Medicare by law is prohibited from negotiating drug prices. Instead it must pay whatever the private profit-driven drug companies demand. It’s not unusual for drug companies to charge hundreds even thousands of dollars for a single dose of popular new drugs.
Is it any wonder that prices for drugs covered under Plan D far exceed those for the same drugs in all other industrialized countries where government buyers negotiate far lower but fair prices? Lower prices are also negotiated by our Veterans Administration. Why then should Medicare not be allowed to do so? Estimated savings if Medicare could negotiate drug prices for all of its beneficiaries, average between $220 and $300 billion over a ten year period (1). Prohibiting Medicare from negotiating drugs costs is a form of highway robbery.
Possibly Medicare Plan D was written with an ulterior motive. Perhaps the prohibition against negotiating drug prices was written specifically to deplete the Medicare Trust Fund so that conservatives could then “save it” by privatizing it. President Bush was a follower of Grover Norquist’s plan to drain federal programs and make them so small they could be drowned in the bathtub.
Eliminate Medicare Advantage. Medicare Advantage was instituted about 30 years ago as a sop to private for-profit insurance companies, giving seniors an option to pick a private plan over the traditional fee-for-service features of regular Medicare. The Medicare system pays the privately run plans a set “premium” per enrollee for hospital and physician services based on a prediction of how costly the enrollee’s care will be. In 2012, the cost to Medicare averaged $10,123 per person, which is approximately 14% more than the average per person cost for regular Medicare.
Medicare Advantage’s 14% premium drains Medicare funds while enriching private insurance companies. Since 1985, the program has cost Medicare $282.6 billion in excess payments (2). Moreover, Medicare Advantage is cherry picking the healthy seniors and leaving those more sick and with more health care needs to regular Medicare, thus increasing costs and draining resources. It is a privatized for-profit system boring away like a cancer within our treasured federal program and it should be terminated as soon as possible (3). http://www.epi.org/publication/pm142/
Yes, Social Security and Medicare could benefit from changes, but the change should not favor giant corporations who seek to profit from and privatize both programs. Change should be designed to favor those people who paid into the programs and need the benefits.
(1) Gellad, Schneeweiss, Brawarsky, Lipsitz, Hass, (2008) What if the Federal Government Negotiated Pharmaceutical Prices for Seniors? An Estimate of National Savings, Journal of Internal Medicine, September, 23(9), 1435-1440. On line, 2008 June 26. doi: 10.1007/s11606-008-0689-7. Available at: http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2517993/
2) PNHP Oct 10, 2012 Private insurers have cost Medicare $282.6 billion in excess payments since 1985 At: http://www.pnhp.org/news/2012/october/private-insurers-have-cost-medicare-2826-billion-in-excess-payments-since-1985 Read more: http://host.madison.com/news/opinion/column/dave_zweifel/plain-talk-ending-medicare-advantage-won-t-hurt-seniors/article_86c63afc-14b0-11e2-ae85-001a4bcf887a.html#ixzz2Fehn0TO7
3) Morrisey, Monique 2009 Medicare Privatization: A Cautionary Tale May 14, at: http://www.epi.org/publication/pm142/