FIX, DON’T CUT, MEDICARE
December 7, 2012 7:16PM
Elizabeth Scrafford prays while in the “Durbinville shantytown” in Federal Plaza. Thursday, December 6, 2012. I Brian Jackson~Sun-Times
Updated: January 10, 2013 6:09AM
That Congress is considering cuts to Social Security and Medicare to avoid sequestration (the so-called “fiscal cliff”) is unconscionable. Both programs were established out of necessity, as before Medicare was signed into law in 1965, only 50 percent of seniors had health insurance and 35 percent lived in poverty. Without Social Security today, estimates show that the poverty rate for individuals 65 and older would increase from 10 percent to nearly 50 percent.
And bringing these programs to fiscal solvency doesn’t need to involve benefit cuts. Here’s how we can shore up the long-term fiscal solvency of both programs.
Strengthen Social Security, a coalition group, cites two easy ways to deal with the Social Security funding shortfall, which won’t happen until 2036, according to Social Security trustees: 1) Raise the payroll tax cap on wages above $110,100, and 2) Let the Bush-era tax cuts going to the wealthiest 2 percent of Americans expire. To that, I’d add two more remedies: 3) Congress needs to stop raiding the Social Security Trust Fund, as it was set up to be separate from the general revenue budget, and 4) Let the 2 percent payroll tax “holiday” expire.
Many Americans aren’t even aware that wages above $110,100 aren’t taxed for Social Security. Strengthen Social Security states that eliminating this tax cap alone would come very close to closing Social Security’s entire projected 75-year funding gap.
One hundred percent of my income is taxed for Social Security; why shouldn’t that be true for everyone?
Save for retirement
It’s also important to note that most Americans aren’t saving nearly enough for retirement, even counting Social Security benefits. According to the Employee Benefit Research Institute’s Retirement Confidence Survey in 2011, 56 percent of Americans have less than $25,000 in total savings. More alarmingly, 29 percent of those in the 55+ category said they have less than $10,000 in total savings. And don’t forget about 2008, when the stock market crashed and many Americans’ private-pension and 401(k) plans lost 37 percent of their value.
Calls to privatize Social Security were conspicuously absent immediately following that crash, but unfortunately, Americans have a short memory. Cutting Social Security is simply not viable, unless you want to plunge millions into poverty and cause a major recession.
Rising medical costs are one of the main reasons for Medicare’s funding issues, not inefficiencies within the program. Medicare administrative costs, in fact, are about 2 percent of operating expenditures, much lower than private insurers. So any plan to secure Medicare’s fiscal solvency must deal with rising health-care costs. Cutting Medicare benefits and privatizing the system further would simply shift rising health-care costs onto citizens, so it doesn’t solve the real issue.
The Center for Medicare Advocacy also proposes the following strategies to help shore up Medicare:
1) Offer a drug benefit in traditional Medicare instead of forcing citizens to purchase private plans through Medicare Part D, and allow the federal government to negotiate drug prices. These measures could save hundreds of billions of dollars over the next 10 years.
2) Stop paying private Medicare plans more than traditional Medicare.
3) Lower the age of Medicare eligibility to allow younger and ostensibly healthier people into the funding pool, people who likely would not need as many services. I would also suggest opening Medicare to all U.S. citizens (otherwise known as universal health care), which is the standard in every other developed nation in the world.
Bottom line: While banks have been bailed out, taxes for the rich have been cut and two wars have been waged with a credit card, Social Security and Medicare are being used as scapegoats to gut two of the most efficient, necessary programs in this country. According to a 2010 poll by Lake Research Partners Survey, Democrats, Independents and Republicans alike overwhelming oppose Social Security cuts in order to reduce the deficit.
Contact your representative and senators and tell them you do not support cuts to these programs. Strengthening Social Security and Medicare can and must become a national priority.
Nancy Dietrich is co-president of the Champaign-Urbana branch of American Association of University Women (AAUW)