Social Security, Medicare, Medicaid and Welfare

The federal government has made promises to American working families that it will provide health and retirement security for our seniors, and that we'll take care of your basic necessities when you've fallen on hard times. But with Medicare, Social Security and Medicaid bogged down by trillions of dollars in unfunded obligations, we will not be able to make good on these promises if something is not done soon.  Americans deserve a federal health and retirement safety net they can count on.
Preserving and protecting the social safety net

Medicare was created in 1965 to help elderly Americans receive medical care without exhausting their hard-earned life savings. The main component of Medicare works by making direct payments to medical providers for services rendered.  In past years, whenever Congress has tried to control Medicare’s growth in spending, then, they must do so by cutting the reimbursement rates to hospitals and doctors.  In order to stay in business when Medicare rates are cut, doctors must either stop seeing Medicare-covered seniors, increase the amount of procedures they prescribe, or shift the cost to non-Medicare payments by charging them more.  Given this scenario, it's no wonder that the cost of medical care is skyrocketing and we have enormous levels of waste in the system.  Meanwhile, as babyboomers become Medicare-eligible, the program is running out of money.

Social Security is in similarly dire straits, but for different reasons.  Because it is financed in a pay-as-you-go manner, current workers’ Social Security taxes are used to pay for the benefits of current retirees. In 1935 when Social Security was enacted, there were about 42 working-age Americans for each retiree, more than enough to cover the costs. Each worker, on average, was contributing less than 2.5% of the benefits of one retiree. However, due to demographic changes, like longer life spans and earlier retirement ages, by 2030 each worker will be paying for nearly 50% of the benefits for one retiree.  That's an unsustainable cost structure that threatens our ability to extend Social Security to future generations.

Social support programs like Medicaid and SNAP are also in jeopardy. As a shared program between states and the federal government, Medicaid’s rapid growth is putting enormous stress on both federal and state balance sheets. CBO estimates that federal spending on Medicaid will grow from nearly $276 billion in 2013 to nearly $622 billion over the next ten years. State budgets are already stretched thin in trying to deal with current programmatic increases, and most won't be able to absorb future increases on top of it.  All Americans will pay more for the broken Medicaid system, both in higher taxes and in lower quality of care, due to decreased access as a result of low reimbursement rates.

Where I stand on Medicare, Social Security, Medicaid and welfare programs

  1. We must ensure that the social safety net remains in place for those that need it most: I support a safety net that directs assistance to the truly needy, provides greater incentives to work and save, and strengthens programs aimed at helping Americans get back on their feet.
  2. Our mandatory spending programs are in danger of insolvency; in order to preserve them for current and future beneficiaries, we must reform them now: If Congress wants to avoid defaulting on federal health and retirement programs, it must adopt a program of gradual adjustment now—one that frees the nation from our debt crisis, strengthens its health and retirement safety net, protects those in or near retirement from any disruptions in their benefits, and supports robust economic growth and job creation. The FY14 Republican Budget outlines exactly what we in Congress can do to achieve these goals. As a former Member of the House Budget Committee, I helped create the Republican Budget that outlines exactly what we in Congress can do to achieve these goals.
  3. Any changes to Medicare should be made without disrupting services for those in and near retirement, and should provide more support for the poor and sick: I have only voted in favor of reform plans that exempt those over the age of 55 from any changes whatsoever.  If you are at or near retirement age, you should see NO changes to the benefits you're receiving, or already plan to receive. The budget I helped create would give those under the age of 55 a choice of either traditional fee-for-service Medicare, or any of a number of approved private insurance plans.  If a senior chose a private plan, Medicare would provide a direct premium payment to offset the cost. This federal contribution would be risk-adjusted so that the sickest seniors and the poorest seniors are protected from high premiums and adverse selection by insurers; conversely, healthy and higher income individuals receive less of a benefit.
  4. We must reform the current Medicaid structure to allow states more freedom to tailor the program to the needs of their populations: The federal share of Medicaid should be converted into a block grant indexed for inflation and population growth. States will be able to give Medicaid beneficiaries more options and better access to care, eliminating the one-size-fits-all program.  Many states, including Indiana through the Healthy Indiana Plan, have already shown innovative ways to greatly increase health coverage and lower costs, and we should encourage them to continue exploring such options.
  5. We must ensure the solvency of Social Security to guarantee income security for our nation’s seniors: If the Social Security Trust Fund is exhausted as expected by 2036, seniors will not be able to enjoy the retirement arrangements around which they have organized their lives.  Nor will the next generation of seniors be able to plan for their own retirement with confidence. The good news is that Social Security only needs minor changes to its formulas in order to stay solvent.  I support working with the President and Congress to make those necessary adjustments to the program to ensure that it is available for our children and grandchildren.

What Do You Think?

I'm here to be your voice.  If you have your own thoughts on this issue, don't hesitate to let me know.

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