August 1, 2014

CONCORD COALITION QUESTIONS LACK OF MEANS TEST & USE OF SURPLUS IN MEDICARE PLAN

WASHINGTON -- The Concord Coalition today welcomed President Clinton's Medicare reform proposal but questioned the lack of means testing and the use of projected budget surpluses as a way to finance future obligations. Concord Coalition Co-Chairs and former U.S. Senators Warren Rudman (R-N.H.) and Sam Nunn (D-Ga.) pointed out that means testing was approved by the Senate two years ago, as a fair method of reforming the Medicare program.

"Adding a prescription drug benefit to Medicare will help modernize the program, but it must be done in a fiscally responsible manner. Medicare prescription drug subsidies should not be provided to every recipient regardless of income or need. Our changing demographics and the growing cost of other programs for seniors will not allow taxpayers to subsidize prescription drugs for higher income people without threatening programs for other age groups. This is really a matter of arithmetic rather than philosophy," Nunn said.

"We are very disappointed that President Clinton has backed away from means testing. The Concord Coalition has always believed that means testing is one of the fairest ways to reform Medicare. Under the current system, Medicare benefits for the well-to-do are financed in part by the payroll and income taxes from people like single mothers doing their best to raise children on barely more than minimum wage, students working their way through college, and couples who are both working, paying child care and double commuting costs, and still not earning enough to afford a home of their own. It is both unjust and bad economic policy to require these individuals to turn over a large portion of their wages to buy health insurance for retirees who live far more comfortably and securely than they do," Rudman said.

"Declining birth rates and increasing life spans for today's elderly mean that the population pyramid that existed just 30 years ago – when the young significantly outnumbered the old – will metamorphose into a population column where various age groups will be roughly equal in size. A sure recipe for generational war is to ask struggling young workers and families to finance an increasing number of wealthy retirees," said Concord Coalition Policy Director Robert Bixby.

"If we're going to add a new entitlement like a Medicare prescription drug benefit, it should be done on an income-related basis. Given the looming age wave, we simply can't afford to subsidize everyone regardless of need. The bottom line is universal entitlements without regard to income are fiscally unsustainable given the changing demographics.

"What's more, devoting projected budget surpluses to Medicare merely masks the need for real reform. It's like telling folks to take two surpluses and call me in the morning. This does not cure Medicare's fiscal and demographic problems. It simply makes us feel better," Bixby said.