Tag Archives: Center for Economic and Policy Research

Social Security Give-and-Take Leaves Old Folks in the Hole

Spring has come to recession-era America, which means that all across the nation, millions of old people are emerging from hibernation and hobbling out to their mailboxes in search of their long-awaited Social alan balgowlah-heights-mailbox-hoops-umSecurity stimulus checks. The first round of payments, which were provided by the American Recovery and Reinvestment Act, have just been mailed out. So while the big banks may be raking in their trillions, U.S. elders–along with recipients of SSI and veterans’ benefits–will soon have a whopping $250 to protect them from the ravages of the economic meltdown. 

 And it looks like we’d better make it last, since it’s the last addition to our monthly checks that we’re likely to see for a long, long time. Federal forecasts show that for the first time in more than three decades, there will be no increase in Social Security benefits next year. In fact, the Congressional Budget Office projects that because of low inflation caused by the recession, there will be no cost-of-living adjustment (COLA) to Social Security until 2013.

As the New York Times reports, “In theory, low inflation is good for people on fixed incomes.” In the current circumstances, however, “The absence of a cost-of-living adjustment, calculated under a formula set by law, will be a shock to older Americans already hit by plummeting home values, investment losses and rising health costs.” While Social Security levels remain frozen, the premiums and co-pays for the Medicare Part D prescription drug program will no doubt continue to rise steeply, as they have every year since the program began. For at least a quarter of Medicare beneficiaries (including working geezers like myself), Medicare Part B premiums will go up as well.

And if we don’t watch out, it might not stop there: The straw man of Social Security “reform” is yet again raising his scruffy head, this time courtesy of Congressional Democrats. As Roll Call reported last week:

In a year already jam-packed with major legislative initiatives, House Majority Leader Steny Hoyer (D-Md.) is breathing new life into the idea of tackling Social Security reform….Hoyer signaled that Democratic leaders may take steps to act on Social Security reform in the fall after Congress advances its two biggest priorities: health care reform and climate change legislation.

“Of our entitlement programs, I believe we would have the easiest challenge in reforming Social Security,” Hoyer said. “Frankly, I believe Social Security is not very difficult mathematically. It may be difficult politically, but not mathematically.”

The Washington Post confirmed that Hoyer is looking to create “a bipartisan consensus” for “overhauling the Social Security system.” Democrats, the Post reported, “have found a willing partner in the Senate,” alan como-mailbox-painting-flowers-umwhere South Carolina’s Lindsey Graham “has stated his desire to work with President Obama to make changes to keep Social Security solvent.”

Graham has long been a supporter of Social Security privatization. But after what’s happened to people’s 401(k)s in the last year, even Graham has had to admit that dog won’t hunt. Instead, he now presents Social Security reform as a “math problem”: “You can do a combination of things, give a little here and give a little there, and get it done,”  he said. 

Anyone who supports the program that lifted millions of elders out of poverty should still be concerned by the ongoing disconnect between the “reform” rhetoric and Social Security’s actual fiscal soundness. (The nation’s private financial institutions, as Dean Baker has pointed out, only dream of being as solvent as the Social Security system.) Following Hoyer’s announcement, the National Committee to Protect Social Security and Medicare commented

given the long list of critical challenges this nation faces right now…it’s hard to imagine why Social Security would share space at the top of the legislative priority list ….After all, Social Security is able to pay full benefits for at least 30 more years….

Some worry Social Security will be used as a bargaining chip in the healthcare debate, others see this as part of ongoing efforts to balance the budget through entitlement program cuts.

As I’ve written before, there are still plenty of powerful voices on the right who woulalan belfield-mailbox-long-umd like to preserve the myth of Social Security as a ticking time bomb that will one day land in the laps of the young. In doing so, they can create a phony intergenerational conflict that deflects attention from the true villains in our economic mess, while at the same time achieving their long-cherished dream of cutting entitlements. As William Greider has written, these forces are getting a new boost from the recession:

Governing elites in Washington and Wall Street have devised a fiendishly clever “grand bargain” they want President Obama to embrace in the name of “fiscal responsibility.” The government, they argue, having spent billions on bailing out the banks, can recover its costs by looting the Social Security system.

By now, we’re all used to witnessing these kinds of bait-and-switch tactics. But according to yet another Washington myth, we’re not supposed to see them coming from the Democrats.

Photos: Alan Wadell, Walk Sydney Streets

Photos: Alan Waddell, Walk Sydney Streets. (Alan was actually Australian, but these photos were too great to pass up. Find out more about Alan Waddell and his walks at http://www.walksydneystreets.net.)

Robbing the Old to Give to the Young (and the Rich)

Advocates for the preservation of so-called old-age entitlements have been warning for some time that Social Security and Medicare may be offered up as a sacrifice to offset the cost of the bailout and stimulus.  This would suit conservatives, who for years have been looking for ways to undermine the popular programs. Leading that charge are the the “granny bashers” hunkered around the Peter G. Peterson Foundation. With an endowment of $1 billion, the Foundation pursues an agenda that consists mainly of bitching and moaning that greedy geezers are taking money away from poor young things with their unconscionable demands for basic health care and income support. With increasing support from the media, the punditry, and some members of Congress, they warn that aging boomers will soon bankrupt the country and destroy the lives of future generations.

It’s particularly absurd that this argument emanates from the likes of Peterson, himself now an octagenarian, who was Nixon’s Secretary of Commerce and and more recently chair of the Council on Foreign Relations. Peterson, who is worth $2.8 billion, was also head of the now-defunct Lehman Brothers, and is probably best known as senior chairman of Blackstone Group, a finance company currently enjoying harsh criticism from the Chinese for having lost that country $80 billion in lousy business. While attacking the programs that support poor elderly people, Peterson seems to have no objection to government bailouts for his old comrades on Wall Street. Bill Greider recently wrote a comprehensive piece in The Nation on the machinations of Peterson and his anti-entitlement cohort. 

This week, Dean Baker, co-director of the Center for Economic and Policy Research,  a Washington think tank,  points out the essential flaws in the granny bashers’ prognostications of doom. In fact, he argues, they have it backwards:

The recent collapse of the housing bubble and the resulting stock market plunge have reduced the wealth of older workers and retirees by close to $15 trillion. This is a transfer to the young, since they will be able to buy the housing stock and the corporate capital stock for a far lower price than they would have expected to pay just two years ago.

Remarkably, the granny basher crew has somehow failed to notice this enormous transfer of wealth from the old to the young. They just continue their crusade to cut Social Security and Medicare as though nothing has happened.

It should be evident that the granny bashers don’t care at all about generational equity. They care about dismantling Social Security and Medicare, the country’s most important social programs. It is important that the public recognize the granny bashers’ real agenda so that they can give them the respect they deserve.

Here Come the Entitlement Wars, Part 2: Turning Class Conflict Into Generational Conflict

Writing for the Guardian today, Dean Baker of the Center for Economic and Policy Research comments on the emerging entitlement wars:

The classic definition of “chutzpah” is the kid who kills both of his parents and then begs for mercy because he is an orphan. The Wall Street crew are out to top this. After wrecking the economy with their convoluted finances, and tapping the US Treasury for trillions in bail-out bucks, they now want to cut Social Security and Medicare because we don’t have the money.

Besides being so galling, the attack on entitlements is based on disinformation: As Baker points out, “Social Security is solidly funded long into the future”–unlike the big banks and other private financial institutions. Medicare’s funding problems are due largely to “the explosion of private sector health care costs,” and could be vastly alleviated by a single-payer system.

But advancing the fear of old-age entitlements as a ticking time bomb, serves an important purpose: It diverts attention from the real purveyors of economic malaise: It’s not the banks, the investment industry, or the insurance companies who are bankrupting our country–it’s the greedy old geezers! It’s not the corporations and the rich people who are getting more than their share–it’s those greedly old geezers! And where are we going to get the money to pay for our stimulus package, our jobs and our infrastructure and our tax cuts? From those greedy old geezers, of course.

And suddenly, instead of a real debate over politics and policy, or corporate malfeasance, or social injustice, what we have is a showdown between the generations.

Bookmark and Share

Throw Granny from the Train: The Washington Post Gives a Boost to Age-Based Health Care Rationing

Two pieces on the front page of the Washington Post’s Sunday “Outlook” section go a long way toward illustrating what’s wrong with the  terms of current debates around health care costs and health care for the elderly. The juxtaposition of these two commentaries, which appeared side-by-side under a photo of a sunset and the heading “The Dying of the Light,” sends an insidious message about the need for “rationing” treatment to the very old and very sick: To keep health care costs from bankrupting our society, it suggests, we may have no choice but to pull the plug on the geezers.

The Post feature is only the latest of a growing volume of commentary on so-called age-based health care rationing. Even beyond any core ethical questions, the problem with these discussions is what they too often fail to mention: the role of private profits in creating, or at least seriously exacerbating, the supposedly intractable problem of health care costs. Like everything else in the public debate over health care policy, the “dying of the light” has become subject to the lying of the right, where corporate interests trump even questions of life and death.

There’s nothing inherently objectionabale about one of the two pieces, written by doctor at a Minneapolis hospital who cares for “patients struggling through the winter of their lives.” Craig Brown writes:

Today, thanks to myriad medications and interventions that have been created to improve our health and prolong our lives, dying has become a difficult and often excruciatingly slow process.

The author questions the prevailing practice of using extreme measures to prolong the lives of the “threadworn elderly,” when “what’s waiting for them at the end of this illness is just another illness, and another struggle.” Mercy, he says, demands that we change our attitude and our approach toward death. I’ve got no argument with this, which is why I support end-of-life choice for the chronically and terminally ill.

Craig Brown is careful to say that “nothing in my medical training qualifies me to judge what kind of life is satisfying or worth living.” He also states clearly that his position “isn’t about euthanasia. It’s not about spiraling health care costs. It’s about the gift of life–and death. It is about living life and death with dignity, and letting go.”

The same is not true of Post health and science reporter David Brown (also a physician), who wrote the companion piece. He points out that health care costs are growing faster than the economy, due largely to advances in medical care. “Each year, there’s more that can be done and more that’s judged worth doing”–and it’s all terribly expensive. At the same time, life expectancies are lengthening and the population is aging. As a result, he says:

We are on a collision course between our wish to live longer, healthier lives and our capacity to pay for that wish. Whether we can somehow avoid the collision is perhaps the most important domestic issue of this century. From now on, health care costs will be up there with globalization, terrorism and climate change as a force shaping our world.

While David Brown doesn’t blame this all on old people, per se, he does point to the growth in Medicare’s costs, and warns that “unless something changes, in about 75 years, Medicare alone will cost as much as the sum of all our federal income taxes.” And while he says he has no solution to offer that will “rescue us from the Malthusian Spectre of health care spending,” the implicit solution is clear–if not from the article itself, then from its placement alongside Craig Brown’s piece on the tormented lives of the chronically ill elderly. The obvious way to slow our progress toward economic and social destruction is for old folks to stop having all those expensive interventions and just give up the ghost. And if the geezers won’t make the decision to do this voluntarily–well, then, society might have to make it for them.

In blog for the American Prospect, Dean Baker of the Center for Economic and Policy Research lays out why the underlying terms of this debate are fatally flawed. Criticizing David Brown’s Post piece for “telling readers that there is nothing we can do about health care costs,” Baker writes:

Remarkably, this lengthy column never once notes the fact that the United States pays more than twice as much per person for health care than the average of the other wealthy countries, all of whom enjoy longer life expectancies.

This is a hard to overlook piece of evidence suggesting that the United States could do a great deal to lower its health care costs. Among other things, we have a hugely wasteful insurance system (noted in the column), pay close to twice as much for prescription drugs as people in other wealthy countries, and pay our medical specialists close to twice as much as they earn in other wealthy countries.

Overpaying for drug and doctors not only directly wastes money by causing us to pay more for the same services. The huge rents created by these over-payments leads drug companies and specialists to find ways to promote excessive use of their products and services. The result is really bad and really expensive medicine.

Studies comparing health care in the United States and other industrialized countries–including those conducted by the World Health Organization, Congressional Research Service, Kaiser Family Foundation, and Commonwealth Fund–consistently find dramatically higher spending in the U.S. (both per capita and as a percentage of GDP), and poorer performance on a host of important health measures, from life expectancy to infant mortality to medical errors. All of these other countries, of course, have public single-payer health care systems, while we have medicine for profit.

I’m as public spirited as the next person, and I have a Gen-X son. So I’d like to think I’d be willing to give up some expensive, life-prolonging medical treatment if the future of humanity depended upon it. But I’m certainly not going to do it so that some pharmaceutical company executive can take another vacation in Bora-Bora, or so that an elected official can get another big campaign contribution from the insurance industry.

So here’s my advice to anyone who suggests that American geezers should do the right thing and accept age-based health care rationing: Institute a single-payer system, cut our national health care costs in half–and then get back to me.

Bookmark and Share

AARiP-Off: Group Rakes in Funds from Medicare Prescription Drug Plans

AARP created a controversy within its own membership when it backed George W. Bush’s Medicare Plan D, which provides insurance for seniors buying prescription drugs. Plan D is a scam on a number of fronts: By design, the government is promoting and susidizing a plan that is effectively run by the private insurance companies, in concert with the pharmaceutical companies. The long and the short of it is that the government pays out money at rates set by these two huge industries, with seniors picking up the substantial premiums and co-payments (and full costs when they fall into the the notorious coverage gap). All efforts to get the government to take over this program and directly negotiate drug prices have been rebuffed by both industries, despite a Democratic majority in Congress.

 

As the main lobby representing the 37 million Americans over 65 (12 percent of the population), AARP ought to be leading the charge against a program that puts corporate profits before its members’ health. Instead, its efforts have focused on reaping a large share of those profits itself. From the beginning, AARP partnered with insurance companies to offer Part D insurance plans, which soon gained a corner on the market. (I admit that I’m signed up for one of them myself.)

 

Now, Bloomberg news has reported that AARP “collects hundreds of millions of dollars annually from insurers who pay for AARP’s endorsement of their policies…The insurance companies build the cost of these so-called royalties and fees, which amounted to $497.6 million in 2007, into the premiums they charge AARP members, according to AARP’s consolidated financial statement for that year.” Critics say that the AARP-sponsored policies often sell at inflated prices, and don’t offer the best coverage for the money.

 

The Bloomberg report continues: “AARP uses the royalties and fees to fund about half the expenses that pay for activities such as publishing brochures about health care and consumer fraud –as well as for paying down the $200 million bond debt that funded the association’s marble and brass-studded Washington headquarters.” AARP headquarters takes up an entire block in downtown Washington, D.C. This in the capital city where an astounding 24 percent of people over 65 live in poverty–the highest poverty level for seniors in the nation.

 

Iowa’s Senator Charles Grassley, the ranking Republican on the Senate Finance Committee, recently questioned AARP CEO William Novelli and state insurance commissioners as to whether AARP is misrepresenting claims it makes in pitches for the organization’s health insurance policies “The pitch for these products should be straight up and informative, instead of designed to leave the impression of being comprehensive when the product is, in fact, very limited and leaves consumers seriously in debt if they need intensive medical care,” Grassley said. “Individuals shopping in the health insurance marketplace shouldn’t be taken advantage of. A big time advocate for health security should not target under- and un-insured Americans with misleading marketing. Consumers deserve better. It’s not better than nothing to encourage people to buy something described as ‘health security’ when there’s no basic protection against high medical costs.”

 

Grassley is right to question whether these plans are “better than nothing.” In fact, the same question could be asked about Medicare Part D as a whole. A study released last week by the Center for Economic and Policy Research found that three years into the program, “most seniors experienced no reductions in their health care spending as a result of the Medicare Drug benefit.”