The Future of Social Security and Medicare—

Will they be there for me?

AARP ArkansasMichael Rowett

AARP

Agenda

• Thank You• Budget Control Act• Impact on Programs• Joint Committee• Timeline• Facts on Social Security and

Medicare• AARP’s Position• Actions You Can Take

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Budget Control Act of 2011

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The debt ceiling bill is a temporary reprieve, but the fight to protect and strengthen Social Security, Medicare, and Medicaid is far from over.

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Basic Impact onSocial Security

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• No immediate cuts

• Could be affected through future recommendations

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Basic Impact onMedicare

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• No immediate cuts or increases in seniors’ costs

• Could be affected through future recommendations

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Basic Impact onMedicaid

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• No immediate cuts or increases in seniors’ costs

• Could be affected through future recommendations

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Budget Control Act of 2011

Beginning of Federal Fiscal Year 2012. Caps on spending begin that will reduce

the deficit by $917 billion over 10 years.

Only $21 billion will be saved in the first year, 2012—cuts are back loaded. Congress could make further cuts to budget for fiscal year 2012.

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What's Next

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• Bipartisan 12 member Joint Congressional Committee appointed

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Budget Control Act of 2011

November 23rd

Deadline for joint committee to report recommendations to come up with at least $1.5 trillion in between 2012 and 2021

Everything is on the table. The committee can consider tax reforms that increase revenue, as well as cuts to SS, Medicare, and Medicaid. 

 

 

 

 

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Budget Control Act of 2011

December 23rd

Deadline for House and Senate to have an up or down vote on recommendations—no amendments, all or nothing vote.

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Budget Control Act of 2011

January 15, 2012

If Joint Committee recommendations are not enacted, up to $1.5 trillion across the board spending cuts.

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Budget Control Act of 2011

• Half come from national security.

• Medicare subject to limited cuts.

• Social Security and Medicaid excluded.

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If Congress does not reach agreement up to $1.5 trillion in cuts:

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Not Part of Budget Control Act of 2011

December 31st

Current Sustainable Growth Rate (Doc Fix) patch expires.

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Social Security

Social Security has not added on dime to the national debt—it should not be part of the debt discussion.

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Social Security

Social Security is not going broke.

Social Security can pay full benefits for the next 25 years—and that’s without any changes at all.

After that, it will still be able to pay future retirees 75 percent of their promised benefits.

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AARP

Social Security

Social Security is separate from the rest of the budget, financed from employee and employer payroll tax contributions, as well as the interest on bonds in the Social Security trust funds.

Social Security has been running a surplus for decades and has not contributed to the nation’s current deficit problem.

Even in the midst of the recent economic crisis, the current $2.6 trillion Social Security Trust Funds continue to grow.

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Social Security

Social Security benefits are modest and yet seniors depend on them as their largest source of income.

An average worker’s Social Security retirement benefit will only replace about $4 out of every $10 they earned while working.

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Social Security

Today, the typical retirement benefit is only about $1,200 per month and is adjusted annually to keep pace with inflation.

Social Security is critical not only to lower income seniors but also to protecting the middle class.

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Social Security

In 2009, more than half of all older Americans relied on Social Security for 50 percent or more of their family income; while nearly one in four relied on Social Security for 90 percent or more of their family income.

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Social Security

Arkansas has the nation’s highest percentage—63 percent—of older Americans who rely on Social Security for at least half of their family income.

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Medicare

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Medicare

Medicare doesn’t cover all seniors’ health care costs.

Medicare only covers about half of seniors’ health care costs, and most seniors have supplemental coverage.

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Medicare

It doesn’t cover long-term care, dental, vision or hearing aids.

It requires deductibles as well as premiums.

It requires cost sharing that increase out of pocket costs.

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Medicare

Medicare beneficiaries spend 20 percent or more of their income on health care costs.

With the average senior living on less than $20,000, high health costs make it difficult for millions of seniors to make ends meet.

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Medicare

Over the last 30 years, Medicare’s costs have been growing more slowly than private insurance.

Medicare’s administration costs are much lower than private insurance—only about 6 percent of Medicare spending goes for administrative costs.

By contrast, 10 to 20 percent of private-insurance premiums go for administrative costs.

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Medicare

Forcing people to wait until they are 67 to be in Medicare, as some in Washington, DC have suggested, would mean an average increase of $2,200 a year in out-of-pocket costs for 65 and 66 year-olds, according to the respected Kaiser Family Foundation.

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Medicare

The damage would not be confined to people under 67.  Increasing the eligibility age would also push up Part B and Part D premiums for everyone in Medicare because the Medicare population overall would be older, less healthy, and more costly. 

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Medicare

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Medicare

Congress can reduce the cost of health care throughout the system by improving the delivery of health care generally, including better coordination of care, lowering the cost of prescription drugs and reducing waste fraud throughout the entire health care system.

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Medicare

If Congress only focuses on reducing costs in Medicare, it will result in cost shifting or higher premiums in the private sector.

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Social Security

With modest changes, similar to those agreed to by President Reagan and Speaker O’Neill, Social Security will continue to be able to pay out the benefits future generations will earn through a lifetime of hard work.

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AARP to Congress

Congress needs to make tough choices to address our growing debt, but they should make responsible decisions that don’t hurt seniors and cut the benefits they’ve earned after a lifetime of hard work.

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AARP to Congress:

Don’t make a political deal that cuts Social Security and Medicare benefits.

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AARP's Position

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AARP is fighting to stop Congress from making a political deal that cuts your Medicare and Social Security benefits. Instead of cutting the benefits you’ve worked for, Congress should reduce the deficit by cutting waste and close tax loopholes

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• Cuts Hurt Real People: In these tough economic times, Washington shouldn’t cut the benefits seniors and middle class Americans have worked for and depend on. Cuts to Social Security and Medicare benefits could dramatically increase seniors’ health costs, threaten their access to doctors and hospitals and reduce the benefits checks they rely on to pay the bills.

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• Target Waste Not Seniors: Congress needs to make tough choices to reduce the deficit, but they shouldn’t harm seniors or the middle class by cutting the retirement benefits they’ve paid into their entire lives.

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• Worked Hard: Seniors have worked hard their entire lives, paying into the system to earn their Social Security and Medicare - benefits that protect America’s middle class.

• Voice in the Discussion: Seniors and middle class Americans have earned a voice in any discussion about the future of Medicare and Social Security.

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The Future of Social Security and Medicare—will they be there for me?These programs need to be strengthened as part of a thoughtful,

reasoned, and broader conversation about retirement and American values.

Social Security and Medicare are much too critical for too many Americans for the President and Congress to rush in and make harmful cuts as part of another Washington budget deal.

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AARP

Thank You

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Michael RowettAssociate State Director-Communications

AARP Arkansas1701 Centerview Drive, Suite 205 (The Redding Building)

Little Rock, AR  72211(501) 217-1625

(501) 227-7710 (Fax)Email: mrowett@aarp.org

www.aarp.org/ar