Seniors to get a break on Medicare Part B premiums in 2023

 

Today, President Joe Biden held an event in the Rose Garden at the White House to celebrate the lower drug costs possible thanks to the Inflation Reduction Act, which passed without any Republican votes in either the House or the Senate. Phasing in over the next few years, the measure will cap the out-of-pocket costs for prescription drugs at $2000 a year and make vaccinations free for seniors on Medicare. If the price of drugs rises faster than inflation, drug companies will have to rebate the difference to Medicare. And Biden noted that today, the Department of Health and Human Services announced that the premium for Medicare Part B, which pays for doctor visits, will decrease this year.

All of this was possible, he said, because the biggest corporations in America will have to pay a minimum corporate tax of 15%. “The days of billion-dollar companies paying zero taxes are over.” “And,” he added, “we’re doing all this by bringing down the deficit at the same time. You hear about us being ‘big spenders’? Well, they raised the debt by $2 trillion. We’ve reduced the deficit in my first year, 2021, by $350 billion.”

Biden called out the Republican budget plan, written by Florida senator Rick Scott, to sunset all federal legislation in five years, promising that Congress will reauthorize it if it is worthwhile. This means that every five years, Congress will have to vote to reauthorize Social Security and Medicare or they will end. Wisconsin senator Ron Johnson has gone further, calling for moving Social Security and Medicare spending from mandatory spending, which is protected, to discretionary spending, which must be reapproved every year, thus making it vulnerable to cuts or even elimination.

“I have a different idea,” Biden said. “I’ll protect those programs. I’ll make them stronger. And I’ll lower your cost to be able to keep them.”

Biden likely made this stand, at least in part, because Republican attack ads have been telling seniors that the Democrats have made cuts to Medicare. It is technically true that costs will drop: the government should save $237 billion between 2022 and 2031 from the Inflation Reduction Act’s drug policies. But these savings come from the fact that the IRA lets the federal government negotiate with pharmaceutical companies over prices, not because it will cut the benefits seniors receive.

Disinformation seems to be the hallmark of the midterm campaign.

In June, Republicans championed the overturning of the 1973 Roe v. Wade decision protecting the right to abortion, at first insisting that the Dobbs v. Jackson Womens’ Health decision would simply send the question of abortion rights back to the states. Now, with Republican lawmakers calling for a national law outlawing abortion everywhere, those running for election are scrubbing their websites of their abortion stances and downplaying the issue.

A Quiet ‘Sea Change’ in Medicare

Paul O. Boisvert for The New York TimesGlenda Jimmo at home in Lincoln, Vt., in 2012. She was the lead plaintiff in a lawsuit over whether Medicare should pay for treatment for people whose underlying conditions were not likely to improve.

N.Y. TIMES

THE DEBT CEILING: WHAT'S AT STAKE

CBS NEWS

It is the economic calamity that no one expects and everyone fears.
Experts agree that failing to raise the nation's debt ceiling by Oct. 17, when U.S. officials say the government will run out of money to pay its bills, would gravely wound the economy, and perhaps even throw it back into recession. Because Treasury bonds and the dollar are cornerstones of the global financial system, meanwhile, the shock wave would be felt around the world.

"The potential is disastrous," said Gus Faucher, senior economist with PNC Financial Services Group. "We would see interest rates spike across the board. We'd see a huge crash in the dollar. People count on lending their money to the federal government and getting it back, and if that trust is taken away -- it's never happened that we haven't met our obligations as a nation -- then that has very, very negative consequences for the U.S. economy."
The consequences are so severe that, even as the government shutdown enters its second week, most seasoned political observers still expect Congress to ultimately reach an eleventh-hour deal to lift the government's borrowing limit.
But what exactly is the debt ceiling, and exactly how worried should Americans be that it could come crashing down?

The debt ceiling is the total amount of money the U.S. government can borrow (by selling Treasury bonds) to pay its obligations, including interest on the national debt, Social Security and Medicare benefits, and many other payments. That limit is currently $16.7 trillion, although technically the government already exceeded it in May. The Treasury Department has since used various measures to continue borrowing.
During World War I, amid uncertainty regarding the total costs of funding U.S. involvement in the conflict, Congress created the cap in 1917 to put an upper limit on federal borrowing. Since 1960, Congress has raised the debt ceiling 78 times.



How is the debt ceiling changed?
Lawmakers can adjust it by passing a standalone bill or by including it in another piece of legislation as an amendment.

Does raising the debt ceiling increase the federal debt?
No. Lifting the borrowing limit simply allows the government to pay its existing bills. That debt exists whether or not Congress authorizes additional borrowing, and to avoid default it must be paid.

Why can't Congress and the White House avoid lifting the cap by cutting federal spending?
Because preventing the government from borrowing to meet its obligations would require all discretionary spending, such as for defense, education, housing and other annual appropriations, to stop, according to the Congressional Research Service. Most of the outlays for mandatory programs, such as Social Security, also would have to be halted, while taxes would need to rise to ensure the government had money to spend. Deep spending cuts and tax hikes would throw the economy into recession.


Jacob Lew

Treasury Secretary Jacob Lew recently forecast that on Oct. 17 the government would have about $30 billion on hand. That isn't enough because the government spends as much as $60 billion per day. "If we have insufficient cash on hand, it would be impossible for the United States of America to meet all of its obligations for the first time in our history," he said last week in a letter to congressional leaders.

What happens if Congress doesn't raise the debt ceiling?
If the government runs low on cash, it will have to withhold a range of payments. Retirees might not get their Social Security checks, especially worrisome for the millions of Americans who depend almost entirely on the social insurance program for income. The same goes for Medicare and Medicaid recipients. Holders of Treasury notes, from Wall Street and other global banks to foreign governments, also could get stiffed, jeopardizing the solvency of many financial institutions and choking off global credit flows.

The U.S. also would struggle to pay the interest on its debt, including a $6 billion payout due at the end of the month. At that point, the U.S. would be in default of its obligations. The value of Treasury bonds and the dollar would nosedive. The nation's borrowing costs would soar as anxious investors demanded a higher return to buy suddenly shaky U.S. debt. And because the interest rate on Treasuries provides a benchmark for rates on other loans, from mortgages and credit cards to car and student loans, borrowing would become far more costly for consumers and businesses. Stock markets in the U.S. and elsewhere around the world would almost certainly plunge.
----
....Consumer confidence plummeted after lawmakers squared off over the debt ceiling in the summer of 2011, while the Standard & Poor's 500 stock index dropped nearly 20 percent. Hiring among small businesses slowed. Ever after a deal was struck to raise the cap in August of that year, credit rating agency Standard & Poor's downgraded U.S. debt for the first time ever.

Beyond the immediate economic fallout of defaulting on its debt, for the U.S. the symbolic blow might be even greater. In the post-World War II era, Treasuries and the greenback have -- for better and for worse -- served as the foundation of the global financial system. A default would shatter the faith on which that system relies.



How much danger are we in?
Although financial markets are not yet in panic mode, the standoff in Washington has them worried. Unlike during the 2011 dispute, when Republicans and most Democrats favored cutting federal spending, the stark division over Obamacare suggests there may be less room for compromise this time around. One clear sign of distress: Interest rates on short-term Treasury bonds rose last week, as investors seek greater yields to offset what they perceive as the greater risk of holding the debt.

Still, most economists, stock analysts and, for all the pointed rhetoric on Capitol Hill, even congressional leaders themselves downplay the chances of a default. The belief is that common sense, or at least a sense of political self-preservation, will prevail.




THE HILL

Under the prioritization option, Treasury theoretically could chose some to make payments, such as to Social Security recipients, but forgo others such as refunds to taxpayers or pay for federal workers.

Treasury officials have said prioritization is technically unworkable when applied to non-bond payments, the group noted.

Under a delay scenario, Medicare and Medicaid payments could be pushed back from Oct. 18 to Oct. 21, for example, when more revenue comes in. Social Security checks set for Nov. 1 could be delayed until Nov. 13, leaving seniors without money for half a month.

BPC said that under this option, the delays would become longer and longer until at some point payments would have to be missed.

Hoagland said that Social Security recipients could sue the government over the delay and could likely win a judgment since the benefits are legally considered entitlements.

In either case, delays or missed payments would be seen as some type of default, BPC warned. They said there is no conceivable way the real deadline is in December or January, as some in Congress appear to believe.

METHOD TO OBAMA'S MADNESS FOR A GRAND BARGAIN?

GREG SARGENT WASHINGTON POST

You’ll be startled to hear that John Boehner has declared that Obama’s budget offer of Chained CPI, Medicare cuts that include means testing, and other spending cuts is not good enough:

“If the president believes these modest entitlement savings are needed to help shore up these programs, there’s no reason they should be held hostage for more tax hikes,” Boehner said in a statement. “That’s no way to lead and move the country forward.”

The curious thing about this is that Republicans previously said they wanted these things as proof that Obama is “serious” about cutting spending. In late December, a Boehner aide told Bloomberg News that the Speaker wanted Chained CPI more than other entitlement cuts, such as raising the Medicare eligibility age, as the two were negotiation over a possible cuts-for-revenues swap to avert the fiscal cliff.
And in late November, Mitch McConnell explicitly told the Wall Street Journal that if Obama offered entitlement changes such as Chained CPI and Medicare means testing, Republicans would consider new revenue. He actually said this: “those are the kinds of things that would get Republicans interested in new revenue.”

Apparently none of this remains operative. And so we have a moment of clarity in this debate once again: There is literally nothing that Obama can offer Republicans — not even things they themselves have asked for — that would induce them to agree to a compromise on new revenues.

And of course, whatever you think of Chained CPI — I oppose it and think it is terrible policy — providing this moment of clarity is one of the reasons Obama offered these cuts in his new budget. The idea is to demonstrate once again that one party is willing to compromise to replace the sequester and reduce the deficit, and other isn’t. As a clarifying moment, this rivals what we saw earlier this year, when Republican leaders finally admitted openly that there was no ratio of new spending cuts to new revenues that would be acceptable to them. Today’s GOP response to the Obama budget, should, in theory at least, bring this clarity into even sharper focus.
Indeed, as Jonathan Chait notes, commentators who tend to blame both sides evenly or even fault Obama for failing to “lead” Republicans out of their intransigence are taking notice of this new offer and seeing it as a genuine effort to compromise. One hopes there will be more commentary like this, and as the sequester kicks in, such Beltway chatter could seep into local news coverage around the country and start conveying clearly to voters that Republicans are to blame for whatever sequester pain they’re feeling.

Even if that were to happen, of course, that wouldn’t necessarily force Republicans back to the table. As Kevin Drum points out, Republicans ultimately have more of an incentive to weather the sequester then to reach a deal that includes new revenues, which would deprive them of their ability to rail about spending and force a greater focus wedge issues — such as immigration — that don’t favor them. For what it’s worth, the White House really does believe a deal is still possible — one that involves picking off Republicans who, unlike the leadership, have already expressed an openness to new revenues, such as John McCain and Lindsey Graham.
But even if a deal isn’t possible, that leaves the White House with little alternative other than to extract as much political pain for the ongoing sequester and from continued GOP intransigence as possible, with an eye towards the 2014 midterms. That’s what today’s exercise is all about.

SOCIAL SECURITY, MEDICARE AND DEFICITS

Why doesn’t Obama appoint Krugman Secretary of the Treasury? And while he’s at it he should make Mr. Krugman his personal advisor. Here Mr Krugman expertly explains why raising the retirement age on Social Security and Medicare would be a harsh blow to Americans in the bottom half of the income distribution.

http://www.nytimes.com/2012/11/16/opinion/life-death-and-deficits.html?smid=tu-share

America’s political landscape is infested with many zombie ideas — beliefs about policy that have been repeatedly refuted with evidence and analysis but refuse to die. The most prominent zombie is the insistence that low taxes on rich people are the key to prosperity. But there are others.

And right now the most dangerous zombie is probably the claim that rising life expectancy justifies a rise in both the Social Security retirement age and the age of eligibility for Medicare. Even some Democrats — including, according to reports, the president — have seemed susceptible to this argument. But it’s a cruel, foolish idea — cruel in the case of Social Security, foolish in the case of Medicare — and we shouldn’t let it eat our brains.

First of all, you need to understand that while life expectancy at birth has gone up a lot, that’s not relevant to this issue; what matters is life expectancy for those at or near retirement age. When, to take one example, Alan Simpson — the co-chairman of President Obama’s deficit commission — declared that Social Security was “never intended as a retirement program” because life expectancy when it was founded was only 63, he was displaying his ignorance. Even in 1940, Americans who made it to age 65 generally had many years left.

 

Now, life expectancy at age 65 has risen, too. But the rise has been very uneven since the 1970s, with only the relatively affluent and well-educated seeing large gains. Bear in mind, too, that the full retirement age has already gone up to 66 and is scheduled to rise to 67 under current law.

 

This means that any further rise in the retirement age would be a harsh blow to Americans in the bottom half of the income distribution, who aren’t living much longer, and who, in many cases, have jobs requiring physical effort that’s difficult even for healthy seniors. And these are precisely the people who depend most on Social Security.

 

So any rise in the Social Security retirement age would, as I said, be cruel, hurting the most vulnerable Americans. And this cruelty would be gratuitous: While the United States does have a long-run budget problem, Social Security is not a major factor in that problem.

 

Medicare, on the other hand, is a big budget problem. But raising the eligibility age, which means forcing seniors to seek private insurance, is no way to deal with that problem.

It’s true that thanks to Obamacare, seniors should actually be able to get insurance even without Medicare. (Although, what happens if a number of states block the expansion of Medicaid that’s a crucial piece of the program?) But let’s be clear: Government insurance via Medicare is better and more cost-effective than private insurance.

 

You might ask why, in that case, health reform didn’t just extend Medicare to everyone, as opposed to setting up a system that continues to rely on private insurers. The answer, of course, is political realism. Given the power of the insurance industry, the Obama administration had to keep that industry in the loop. But the fact that Medicare for all may have been politically out of reach is no reason to push millions of Americans out of a good system into a worse one.

What would happen if we raised the Medicare eligibility age? The federal government would save only a small amount of money, because younger seniors are relatively healthy and hence low-cost. Meanwhile, however, those seniors would face sharply higher out-of-pocket costs. How could this trade-off be considered good policy?

 

The bottom line is that raising the age of eligibility for either Social Security benefits or Medicare would be destructive, making Americans’ lives worse without contributing in any significant way to deficit reduction. Democrats, in particular, who even consider either alternative need to ask themselves what on earth they think they’re doing.

 

But what, ask the deficit scolds, do people like me propose doing about rising spending? The answer is to do what every other advanced country does, and make a serious effort to rein in health care costs. Give Medicare the ability to bargain over drug prices. Let the Independent Payment Advisory Board, created as part of Obamacare to help Medicare control costs, do its job instead of crying “death panels.” (And isn’t it odd that the same people who demagogue attempts to help Medicare save money are eager to throw millions of people out of the program altogether?) We know that we have a health care system with skewed incentives and bloated costs, so why don’t we try to fix it?

 

What we know for sure is that there is no good case for denying older Americans access to the programs they count on. This should be a red line in any budget negotiations, and we can only hope that Mr. Obama doesn’t betray his supporters by crossing it.