How Obama’s Budget Threatens Social Security, Medicare & Medicaid

In the wake of the news that, this coming Wednesday, a Democratic president will make the rollback of social insurance a key aspect of his budget policy, I feel a reminder is in order. The headline benefit cut is Chained CPI, a cut to Social Security. But if I was right when I wrote this …

The second piece Obama wants is to shrink the social insurance safety net. He’s wanted this since forever anyway, since at least 2006 by my count, when he was one of Wall Street’s favorite freshman senators (that’s Robert Rubin he’s saying “Hi Bob” to). He’d really like to get at Social Security — his 2011 offer to Boehner included that piece — but recent reaction to that part has made it toxic (thank you, progressives!).

So he’s making a run at Medicare.

… then any cut to any of the big three programs — Social Security, Medicare, Medicaid — will do, will start the FDR-betrayal ball rolling.

Here’s what that looks like in the wake of last week’s news. This is Reid’s reaction to Obama’s budget. Note the threat to Medicare (my emphasis and paragraphing):

Reid, fresh off a phone call with the president, carefully steered clear of answering questions about his reaction to Obama’s reported endorsement of “chained CPI,” a Social Security calculation that would reduce the size of future benefits, on KNPR’s State of Nevada this morning.

Instead, he focused on his willingness “to look at ways we can make Medicare more effective.” But Reid and Obama have agreed for a while that Medicare, the government’s health insurance program for seniors, can be poked and prodded for more savings. They have not, historically, seen eye to eye on proposals to alter Social Security.

Reid looks like he’s a Social Security hero, and good on him for that. If so, prepare for the benefit-cuts ground to shift again, to Medicare.

What counts as a social insurance “benefit cut”?

We are guarding seven borders, each a proxy for all. Each of these seven items is a benefit cut:

Social Security
1. Raising the retirement age
2. Chained CPI instead of current COLA
3. Means-testing benefits

Medicare
4. Raising the eligibility age
5. Increasing Part B premiums
6. Increasing “cost-sharing”

Medicaid
7. Shifting costs to the states by any means, such as “federal blended rate,” etc.

Read on for the detail, why each of the above cuts is bad.

Why each of these benefit cuts matters

Here’s the detail on each of these benefit attacks — what each one is, why each is bad.

Social Security

1. Raising the retirement age and the “earliest eligibility age”. Right now you can retire with some benefits at 62 and full benefits at 67. Simpson-Bowles, the Obama-appointed Catfood people, want to raise the full age to 69 and the early eligibility age to 64.Daniel Marans, who works at SocialSecurityWorks.org, reminds me via email:

Raising the full age two years amounts to a 13 percent across-the-board cut from what you are currently scheduled to get at whatever age you claim benefits. It is also the most regressive, discriminatory option against the non-rich.

2. Using “Chained CPI” to change the COLA adjustment. The COLA adjustment is already horribly low. Making it lower is unconscionable. Marans again:

CPI would devastate long-time disabled and late old-age Social Security beneficiaries—including current beneficiaries—cutting benefits for a worker claiming at age 65 by $653 a year at age 75, $1,139 a year at age 85, and $1,611 a year at age 95. It whacks veterans and the indigent disabled on SSI too. And of course, the tax increases it imposes are especially regressive.

3. Means-testing — reducing earned benefits for the “wealthy.”There are two problems with this. First, you’d have to cut benefits for people earning less than $50,000 per year to get any real savings. And second, converting Social Security to welfare is Goal One of the kill-it crowd, ’cause you know what we do to welfare in this country, don’t you? We kill it. More here.

Medicare

4. Raising the eligibility age to 67. Horrible idea. Marans again:

This is a disastrous policy that would put 435,000 of 65- and 66-year-olds out on the street without insurance, and jack up out-of-pocket costs for everybody, eroding Social Security benefits by proxy.

Plus it will kill people. Actual humans, thousands of them.

5. Increasing the Part B premiums. This is a bad idea on two counts.Right now, the government subsidizes Medicare Part B premiums, according to an income-adjusted sliding scale. Income-adjusted premium support is already a form of means-testing — as noted above, a very bad idea. Changing this scale would be even worse, since half of Medicare beneficiaries had incomes below $22,000 a year in 2010.

6. Increasing cost-sharing. This means paying less out of Medicare’s pocket for treatment, making you pay more. Gouging the elderly to save a view federal bucks. This is the opposite of what the program was designed to do.

Medicaid

7. Shifting costs to the states. Anything that saves federal dollars by making states pay more will hurt recipients. Period.

The most recent proposal came in 2011 with Obama’s proposal of a “federal blended rate” for state reimbursement for Medicaid and CHIP (Children’s Health Insurance Program — yep, saving money on the backs of children). The detail is here, but there’s a bottom line.

Medicaid isn’t sexy. It’s wonky from the first sentence. It’s easier to cut since it looks from the outside the most like welfare — you know, it goes to poor people and all.

But it’s a cut, it will likely cause needless deaths, and it needs to be ring-fenced like the rest of these vulnerabilities — these doors through which the “deficit hawks” will use to get at the chickens. Medicaid may be the last of the hens at risk — our foxy friends will go after bigger, more symbolic prize first. But if they have to, they’ll take the scalp they can get, and that may be Medicaid.

Like a fox, Obama is circling all three social insurance programs; if a door to one is closed, he tries another. Our job — recognize that each door above is a proxy for all of them, and guard all seven.

Class War Kitteh on the “Rich and the Rest”

The Rich, lead by their One Percent Hero, are assaulting full-on the weak and the oppressed — the cogs, the cast-off, the castaway old. Class War Kitteh has your back.

You need to have your own back as well. It’s a war, a real one, and no one can sit back. We’re winning — let’s keep it that way.