Republicans are taking a bold political gamble by pushing historic changes in Medicare and Social Security.
The popular programs, designed primarily to provide health care coverage and income security for seniors, have been politically untouchable for decades.
But presumptive GOP presidential nominee Mitt Romney, as well as most congressional Republicans, embrace sweeping changes that, among other things, would alter dramatically how seniors get health coverage a decade from now.
Democrats think the GOP has given them a gift, an issue they can use to illustrate how Republicans and their well-heeled friends are ready to abandon generations-old societal obligations to seniors.
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But it’s not clear who’s got the political advantage, if any. The major GOP Medicare plans wouldn’t affect anyone now 55 and over, and those under that age may care more about arresting the ballooning federal debt – and Medicare’s impact on it – than the health of the program decades from now.
Study after study has found that to pare the government’s record debt significantly, the ever-rising costs of Social Security and Medicare must be slowed. Social Security and Medicare accounted for 36 percent of federal spending in fiscal 2011, and as baby boomers age, those costs are projected to keep rising.
Polls show that the economy is the primary voter concern in the 2012 elections, but these two giant entitlement programs are part of the economic equation.
“There is one big issue, and that’s the economy,” said Peter Brown, assistant director of the Quinnipiac University poll. “For some people there are aspects of it more important than others, but generally the economy is issue one through 29.”
A Pew Research Center poll in January found that securing Social Security ranked fifth and securing Medicare seventh on the public’s priority list for Congress; strengthening the economy was first, followed by improving the job situation, combating terrorism and reducing the budget deficit. Improving education ranked sixth.
Still, even suggesting tinkering with Medicare and Social Security carries political risks . The eligibility age for full benefits is now gradually increasing. For those born after 1960, it will be 67. Romney would increase it further, allowing it to rise along with increases in longevity. He also would slow the growth in benefits somewhat for wealthier recipients; no details have been disclosed.
“Romney’s playing with fire. You always are when you delve into Social Security and Medicare,” said Larry Sabato, director of the Center for Politics at the University of Virginia.
Yet this could be the year the conventional political rules change, because the skyrocketing federal debt is such an ominous threat to the nation’s economic well-being.
“It’s hard to ignore that piece (the debt) totally,” Sabato acknowledged.
The GOP plan, proposed in several similar formats, works generally like this: After 2022, seniors newly eligible for Medicare would get federal subsidies to buy insurance coverage. They could purchase that coverage from Medicare, but they would have the option of buying a policy from a private company.
All insurance plans would have to offer coverage “at least comparable to what Medicare provides today.” If seniors wanted a more expensive plan, they would have to pay the difference between the federal aid and the premiums’ price. No one currently 55 or older would be affected.
Should they pick a less expensive plan, they could use the leftover federal funds to pay other medical expenses, like co-pays and deductibles. The Romney camp provides no cost or savings estimates.
The Heritage Foundation, a conservative think tank, likes the idea.
“Congress can introduce the powerful forces of consumer choice and competition into Medicare, forcing health plans and providers to deliver value for taxpayer and beneficiary dollars,” it said in a recent report.
All sides agree that something has to be done to control Medicare costs and, to a lesser degree, Social Security. The report issued last month by the programs’ trustees urged: “Lawmakers should not delay addressing the long-run financial challenges facing Social Security and Medicare.”
Social Security’s financial shortfall is less urgent; the trustees estimated that its trust fund reserves will be exhausted in 2033. After that, tax income would be enough to pay only about three-quarters of scheduled benefits through 2086.
Medicare’s situation is more dire. The trustees estimated that the program’s hospital insurance trust fund will be depleted by 2024.
President Barack Obama last month described the problem in a speech to newspaper editors. “Because health care costs keep rising and the baby boom generation is retiring, Medicare, we all know, is one of the biggest drivers of our long-term deficit. That’s a challenge we have to meet by bringing down the cost of health care overall so that seniors and taxpayers can share in the savings,” he said.
He blasted the Republican plan for premium support, saying, “It’s a bad idea and it will ultimately end Medicare as we know it.”
Democrats’ major strategy for cutting costs is the 15-member Independent Payment Advisory Board, created by the 2010 federal health care law. The board, appointed by the president and subject to Senate confirmation, would include physicians and patient advocates. It will recommend ways to save money. The law’s provisions aim to strip about $480 billion from Medicare costs over the next 12 years.
Obama touted the commission last month as a panel “not made up of bureaucrats from government or insurance companies, but doctors and nurses and medical experts and consumers, who will look at all the evidence and recommend the best way to reduce unnecessary health care spending while protecting access to the care that the seniors need.”
Republicans claim the panel would have too much power to make important medical decisions. It wouldn’t, because its recommendations would be subject to congressional review. In March, though, the GOP-led House of Representatives voted to do away with it. That proposal is going nowhere in the Democratic-run Senate.
“You have two fundamentally different approaches,” said Rep. Chris Van Hollen of Maryland, the top Democrat on the House Budget Committee.