FORGOTTEN AMERICANS:
THE FUTURE OF SUPPORT FOR LOW-INCOME OLDER ADULTS
October 19, 2007
Summary of Key Findings
America is getting older. The elderly population has increased steadily since the 1970's, and will continue to increase. Aging baby boomers, living longer, guarantee this. At the same time, poor older Americans are getting poorer. Health costs are rising faster than income for all Americans, but for older Americans this is particularly true, and particularly dangerous.
The Justice Partnership, an affiliation of The Center for Medicare Advocacy and the National Senior Citizens Law Center, held a conference in Washington DC on October 19th to discuss this crisis facing America's rapidly growing low-income, older population. The Conference, entitled Forgotten Americans: the Future of Support for Low-Income Older Adults,connected experts from the parallel universes of social-policy analysis, policy making, academia, and advocacy. Leaders and participants reviewed the pressing needs of older Americans at the bottom rungs of the economic ladder and considered how to get them taken into account in plans for Medicare, Social Security, and other social contract initiatives.
Experts Agreed on Demographic Trends
According to Tricia Neuman of the Kaiser Family Foundation, who opened the Conference, while poverty rates among the elderly have declined since the 1960's, due in large part to the advent of Medicare and Medicaid, they have also remained high for particular groups of older people - African-Americans, Latinos, women, and those aged 75 and up. Ms. Neuman also informed conferees that out-of-pocket health spending as a share of income has increased significantly for older people since 1997 and is substantially higher for seniors than those under age 65. "For seniors," Ms. Neuman said, "out-of- pocket spending on health care consumes 13% of household expenses, on average."
Conference presenter Marilyn Moon, from the American Institutes for Research, reiterated the concerns regarding the number of poor older people. She stated that the very poor older population has not declined, reporting that a full 10% of older Americans are below 100% of the Federal Poverty Level. She said that they will stay this poor into the next generation unless something is done. Further, Ms. Moon noted that without a significant change in direction, people reaching the age of 65 who have had low incomes over their lifetimes will continue to suffer from a lack of resources, and others who have had modest incomes are likely to face declining finances and resources. Meanwhile, as low income older people are increasing in number, the future of Medicare, the key to older American’s health security, is being bled by the rapid increase in and subsidies for private Medicare Advantage plans.
Robert Greenstein, from the Center for Policy and Budget, told conferees that the dramatic increase in Medicare private plans, along with the Bush Administration tax cuts further endanger the social safety net for older people. Moderate and low-income older people are being "hung out to dry," he said, as health and income security plan structures move from defined benefit programs to programs with higher costs for participants, capped benefits, and other structural limits on their value. Further, he said, "the course we are on can not be sustained." The cost of Medicare privatization can not continue, he said, with the income projected for the coming years if the Bush tax cuts are continued. "Something will have to be done about these tax cuts and perhaps with the addition of value-added health care taxes, or the safety net for older people will be gone," Mr. Greenstein concluded.
Why Does It Matter, Why Should We Care?
For two generations Social Security, Medicare, and Medicaid have played significant roles in keeping older Americans out of poverty. Too many of us forget what it was like before these programs existed. Before Medicare, for example, 50% of all people 65 or older had no health insurance. With Medicare, 95% have coverage. As these programs come under attack, the critical safety net for older Americans is threatened. Already, rising health care costs combined with a shift toward reliance on private, profit-driven Medicare & Medicaid plans has exposed older people to higher, and ever rising, out-of-pocket costs. Supplemental coverage is declining, and the costs for that which does exist rises annually.
For decades now, retirees have been able to count on Social Security, Medicare, Medicaid, and pensions. Pensions were the first to start to disappear, as more and more employer-funded accounts were replaced by employee-contribution based accounts such as 401-K plans. The increasing reliance on private Medicare plans is the latest attack on the traditional support network on which American elders have come to rely. And, as conferees discussed, Medicare privatization has happened without a lot of attention, or even recognition.
On the other hand, efforts to privatize Social Security have, thus far, been thwarted. Former Congresswoman Barbara Kennelly of the National Committee to Preserve Social Security and Medicare told conferees that this was largely because most people know about Social Security, understand it, and place great value on having a guaranteed, basic income benefit that lasts as long as you live. She suggested that the country did not buy into what she saw as the Administration’s attempt to raise an unwarranted alarm about an exaggerated Social Security crisis. People saw through this, she said, and also see privatization of Social Security as too insecure.
Unfortunately, said Ms. Kennelly, Medicare, with its universally available benefit, has not fared so well. Rather than manufacturing a Medicare crisis, the Administration, in a tremendous end-around, has disguised privatization as "modernizing" Medicare. The Medicare Part D prescription drug benefit was put entirely in the hands of private insurers, while steering more beneficiaries into private plans for their other Medicare coverage as well. Again, according to Robert Greenstein, the payment structures and costs of these plans are the first step on the path to a capped, defined-benefit plan that will shift costs to beneficiaries and leave low-and moderate-income elders "hung out to dry".
Bruce Vladeck of Ernst & Young, former Administrator of the Health Care Financing Administration, (now called the Centers for Medicare & Medicaid Services) reminded conferees that Medicare has always been a public/private partnership. Insurance companies, for example, have been responsible for administration of Medicare payment since the program's inception. However, the advent of Part D and Medicare Advantage has dramatically changed the balance of the partnership. Rather than a flat fee for handling the mechanics of provider payment, appeals, and so on, private insurers are obtaining public Medicare funds, as they entice more and more beneficiaries to pay them their premiums, deductibles and co-insurances. Medicare is becoming a very efficient "earmarking" system with which to funnel funds to private industry, Dr. Vladeck reflected. "This is leading to a significant transfer of public wealth to private entities."
Will The Courts Protect Us?
Noting that the contemporary debate about health care reform mistakenly focuses all its attention on Congress, with "zero attention paid to the courts," Simon Lazarus, Public Policy Counsel to the National Senior Citizens Law Center (NSCLC) said that the nation is "at an historical turning point." The new Supreme Court presided over by Chief Justice John Roberts could decide to ratchet up the Rehnquist Court’s drive to weaken safety net programs as much as possible by eliminating the right of individuals to go to court (the only real enforcement tool for Medicaid), hollowing out the substance of federal laws, and systematically preempting state government attempts to pass stronger legislation. Lazarus’ critique focused on what one prominent conservative scholar called the "Supreme Court’s anti-entitlement doctrines," which erect ever-higher procedural barriers to enforcing Medicaid beneficiary’s rights in court.
Lazarus also spotlighted the Court’s undermining of employer-sponsored benefit plans, having transmuted the Employee Retirement and Income Security Act of 1974 (ERISA), which was passed to protect workers’ benefits, "into a shield that insulates HMOs from liability for even the most egregious acts of dereliction committed against plan beneficiaries." Lazarus said that only push-back from Congress could induce the Roberts Court to resume enforcing safety net laws in accord with beneficiaries’ needs and Congress’ original intent. And, in turn, Congress will stop the Court from subverting these laws only if advocates for Medicaid and ERISA beneficiaries "bring the issues we have been fighting in court to the public, and to the bar of politics."
What Can Be Done?
We are in the midst of an unusually long presidential election period. Older people vote, they are vocal and concerned. Political figures are talking about "universal health care" and "national insurance," but not much is being said about what is happening to Medicare. This is ironic since it is our only national health insurance, and it is being dismantled.
How can we expect to improve access to health care for the uninsured at the same time that we are moving toward less health care for people with Medicare? Conferees asked many questions and began to address the answers. First and foremost, they are aware that their concerns, and those of the people they represent, are not being effectively articulated or heard. They know that this must change. But how?
Advocates for elder rights need to reframe the debate over a national health care plan. It's obvious to everyone that the current system is unsustainable, but why, asked Professor Theodore Marmor of Yale University? Don't make it about "saving" Medicare, he said. Change the paradigm; make it about guaranteeing a societal right.
Further, advocates must shine a spotlight on the Supreme Court’s threat to ordinary Americans’ economic security and the closing of federal court doors to people in need of judicial protection. We must energize Congress and future administrations to prevent de facto judicial repeal of vital safeguards on which their constituents depend.
Together allies for older low-income people need to find a way to express the problems privatization pose for everyone: older people, taxpayers, young and old members of the national community. Conferees suggested that we need to get back to the roots of Social Security and Medicare, to recognize that they were developed in response to true American values. Participants suggested that it is the "American Way" to care together for weaker, ill, and older people and, as a society, to share the risks for doing so.
We need to appeal to youth, who, while perhaps not vocal, are not apathetic. Not only are their parents and grandparents aging, but they too will need these programs, some sooner than they may think.
We need to choose language carefully. Perhaps the notion of an "entitlement" program is misunderstood and easily rejected. We need to find new words to reflect our shared concerns, perhaps the public would better respond to a call for "health and income security"? Finally, as many speakers and conferees noted, we need to rediscover and embrace the reasons and commitment behind the advent of social insurance: a society facing risks together. That is the American way.
