Wednesday, January 23, 2013

Defending the Big Three (Social Security, Medicare, Medicaid) against benefits cuts

The Huffington Post has been running a series of articles taking stock of the Administration and looking toward the second term, called The Road Forward.

The AARP's CEO, A. Barry Rand, addresses a critical set of issues in his contribution, The Road Forward: Social Security and Medicare 01/20/2013. He takes note of what bad ideas two of the things President Obama proposed after his re-election, raising the Medicare eligibility age and decreasing Social Security benefits via the "chained CPI" inflation adjustment scheme.

Rand writes:

We must ... tackle the high cost of health care. Rising costs have a negative impact on federal programs such as Medicare and Medicaid, as well as on the costs for state governments, employers and individuals. Moreover, we cannot sustain an ever-increasing share of the nation's output going to health care, especially when the Institute of Medicine estimates that as much as one third of health care spending is wasteful or inefficient.

Policy makers must not simply reduce the federal share of health costs by shifting costs from the federal government to other payers. That will not solve the problem. In fact, it will make it worse.

An example of this narrow approach is raising the Medicare eligibility age. This policy lowers federal health costs for the program by shifting costs from the federal government to employers, states and families on Medicare. This only drives seniors to more costly and less efficient providers, which, in turn, raises total health spending in the economy.

This is pure folly. A better approach would be to lower the growth in health care spending system-wide, which will also lower the cost of Medicare and Medicaid. We have to make health care work more efficient and less costly to keep it sustainable for generations to come. [my emphasis]
And he calls the "chained CPI" scam what it is:

Of all the steps we can take to ensure that Social Security remains solvent and provides an adequate benefit now and in the future, the proposed use of the "chained CPI" is one of the worst, because it cuts the benefits of those who are least able to afford it: the oldest, poorest and most vulnerable among us. It would cut one full month's income from a 92-year-old beneficiary's annual Social Security benefits. (emphasis in original)
Cutting benefits on Social Security, Medicare and Medicaid is a really, really bad idea.

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