Felicia Muftic: Politicians who tinker with Medicare, Social Security could get burned
Grand County, CO Colorado
Heads up, seniors and future retirees: tinkering with “Obamacare” could be harmful to Medicare’s health sometime in the relatively near future. And, Social Security eligibility ages could be increased if some in Congress have their way.
Polls show changing any policies regarding either of these programs is a political hot potato. Regardless, some Congress members will try, but it is also possible nothing will happen this session as politicians jockey for support from seniors in the 2012 general election.
On the other hand, seniors must realize that waiting until Medicare, Social Security and our country go broke is irresponsible and sometime in the relatively near future we must make changes.
How big is the social security problem? Not as big or as immediate as many advocating raising the retirement age to 70 or privatizing social security want you to believe. According to the Center on Budget and Policy Priorities in a report of August 24, 2010, the trust fund is paying out more in benefits than it collects in payroll taxes and income taxes, but the alarm sounders who cite these statistics neglect to figure in the interest the trust fund is earning. According to the report, “Social Security continues to run annual surpluses and remains capable of paying scheduled benefits in full for nearly three decades.” The Social Security Board of Trustees last August expect full benefits can be paid out until 2037.
The deficit commission recommended eligibility be extended to age 70. The President in the State of the Union rejected the idea. Some Republicans advocate large cuts to the program; and the Republican leadership nearly fell all over themselves to reassure their constituents that anyone who is 55 years old would see no changes. Those who are younger than 55 years old need to sit up and take notice.
What if we tinkered with Social Security sooner than later? It makes sense to begin soon to avoid a big jolt later and to allow time to plan. There also ought to be some conditions we could attach to benefit our children and their children.
Whatever age we set as access to social security, we must not privatize it. If we have ever learned a lesson from the Great Recession it is that depending upon financial markets is sheer folly and we should oppose a plan that relies on the market for basic income that equals a social security check. The market is a gamble; basic living expenses provided by social security should be viewed as a safety net and should never be a gamble for anyone.
Any changes ought to be phased in slowly and those now planning retirement within the next 20 years must be grandfathered in since they have not had the ability to plan for other private retirement funds.
Anti-discrimination employment laws regarding age must apply to those up to age 70.
Options to retire at a fraction of full benefits should be extended to age 70. IRAs and other private retirement plans could be tapped at an even earlier date than now without penalties and at a reduced income tax rate levied when drawn downs are made.
What about Medicare? The key is to reduce its cost. The worst action we would take would be to replace “Obamacare” with some feeble substitute. Medicare’s future is entwined with “Obamacare’s” eliminating subsidies to private insurers to administer Medicare and by many other provisions such as more cost-effective home health care. A recent Medicare Trustees report finds that new payment reform demonstration projects, and productivity improvements in the new health care law will save Medicare $8 billion by the end of 2011, and $575 billion over the next decade.” The life of Medicare will be extended by at least 11 years to 2028. We should demand that Republicans explain how they plan to save at least as much and how their health reform version proposes to extend the life of Medicare.
For more commentary, visit http://www.mufticforum.com
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