The Future of Social Security and Medicare— Will they be there for me? AARP Arkansas Michael Rowett

AARP Agenda Thank You Budget Control Act Impact on Programs Joint Committee Timeline Facts on Social Security and Medicare AARP’s Position Actions You Can Take 2

AARP Budget Control Act of The debt ceiling bill is a temporary reprieve, but the fight to protect and strengthen Social Security, Medicare, and Medicaid is far from over.

AARP Basic Impact on Social Security 4 No immediate cuts Could be affected through future recommendations

AARP Basic Impact on Medicare 5 No immediate cuts or increases in seniors’ costs Could be affected through future recommendations

AARP Basic Impact on Medicaid 6 No immediate cuts or increases in seniors’ costs Could be affected through future recommendations

AARP Budget Control Act of 2011  Beginning of Federal Fiscal Year  Caps on spending begin that will reduce the deficit by $917 billion over 10 years.  Only $21 billion will be saved in the first year, 2012—cuts are back loaded. Congress could make further cuts to budget for fiscal year

AARP What's Next 8 Bipartisan 12 member Joint Congressional Committee appointed

AARP Budget Control Act of 2011 November 23 rd Deadline for joint committee to report recommendations to come up with at least $1.5 trillion in between 2012 and 2021 Everything is on the table. The committee can consider tax reforms that increase revenue, as well as cuts to SS, Medicare, and Medicaid. 9

AARP Budget Control Act of 2011 December 23 rd Deadline for House and Senate to have an up or down vote on recommendations—no amendments, all or nothing vote. 10

AARP Budget Control Act of 2011 January 15, 2012 If Joint Committee recommendations are not enacted, up to $1.5 trillion across the board spending cuts. 11

AARP Budget Control Act of 2011 Half come from national security. Medicare subject to limited cuts. Social Security and Medicaid excluded. 12 If Congress does not reach agreement up to $1.5 trillion in cuts:

AARP Not Part of Budget Control Act of 2011 December 31 st Current Sustainable Growth Rate (Doc Fix) patch expires. 13

AARP Social Security Social Security has not added on dime to the national debt— it should not be part of the debt discussion. 14

AARP Social Security Social Security is not going broke. Social Security can pay full benefits for the next 25 years—and that’s without any changes at all. After that, it will still be able to pay future retirees 75 percent of their promised benefits. 15

AARP Social Security Social Security is separate from the rest of the budget, financed from employee and employer payroll tax contributions, as well as the interest on bonds in the Social Security trust funds. Social Security has been running a surplus for decades and has not contributed to the nation’s current deficit problem. Even in the midst of the recent economic crisis, the current $2.6 trillion Social Security Trust Funds continue to grow. 16

AARP Social Security Social Security benefits are modest and yet seniors depend on them as their largest source of income. An average worker’s Social Security retirement benefit will only replace about $4 out of every $10 they earned while working. 17

AARP Social Security Today, the typical retirement benefit is only about $1,200 per month and is adjusted annually to keep pace with inflation. Social Security is critical not only to lower income seniors but also to protecting the middle class. 18

AARP Social Security In 2009, more than half of all older Americans relied on Social Security for 50 percent or more of their family income; while nearly one in four relied on Social Security for 90 percent or more of their family income. 19

AARP Social Security Arkansas has the nation’s highest percentage—63 percent—of older Americans who rely on Social Security for at least half of their family income. 20

AARP Medicare 21

AARP Medicare Medicare doesn’t cover all seniors’ health care costs. Medicare only covers about half of seniors’ health care costs, and most seniors have supplemental coverage. 22

AARP Medicare It doesn’t cover long-term care, dental, vision or hearing aids. It requires deductibles as well as premiums. It requires cost sharing that increase out of pocket costs. 23

AARP Medicare Medicare beneficiaries spend 20 percent or more of their income on health care costs. With the average senior living on less than $20,000, high health costs make it difficult for millions of seniors to make ends meet. 24

AARP Medicare Over the last 30 years, Medicare’s costs have been growing more slowly than private insurance. Medicare’s administration costs are much lower than private insurance—only about 6 percent of Medicare spending goes for administrative costs. By contrast, 10 to 20 percent of private-insurance premiums go for administrative costs. 25

AARP Medicare Forcing people to wait until they are 67 to be in Medicare, as some in Washington, DC have suggested, would mean an average increase of $2,200 a year in out-of-pocket costs for 65 and 66 year-olds, according to the respected Kaiser Family Foundation. 26

AARP Medicare The damage would not be confined to people under 67. Increasing the eligibility age would also push up Part B and Part D premiums for everyone in Medicare because the Medicare population overall would be older, less healthy, and more costly. 27

AARP Medicare 28

AARP Medicare Congress can reduce the cost of health care throughout the system by improving the delivery of health care generally, including better coordination of care, lowering the cost of prescription drugs and reducing waste fraud throughout the entire health care system. 29

AARP Medicare If Congress only focuses on reducing costs in Medicare, it will result in cost shifting or higher premiums in the private sector. 30

AARP Social Security With modest changes, similar to those agreed to by President Reagan and Speaker O’Neill, Social Security will continue to be able to pay out the benefits future generations will earn through a lifetime of hard work. 31

AARP AARP to Congress Congress needs to make tough choices to address our growing debt, but they should make responsible decisions that don’t hurt seniors and cut the benefits they’ve earned after a lifetime of hard work. 32

AARP AARP to Congress: Don’t make a political deal that cuts Social Security and Medicare benefits. 33

AARP AARP's Position 34 AARP is fighting to stop Congress from making a political deal that cuts your Medicare and Social Security benefits. Instead of cutting the benefits you’ve worked for, Congress should reduce the deficit by cutting waste and close tax loopholes

AARP 35 Cuts Hurt Real People : In these tough economic times, Washington shouldn’t cut the benefits seniors and middle class Americans have worked for and depend on. Cuts to Social Security and Medicare benefits could dramatically increase seniors’ health costs, threaten their access to doctors and hospitals and reduce the benefits checks they rely on to pay the bills.

AARP 36 Target Waste Not Seniors : Congress needs to make tough choices to reduce the deficit, but they shouldn’t harm seniors or the middle class by cutting the retirement benefits they’ve paid into their entire lives.

AARP 37 Worked Hard: Seniors have worked hard their entire lives, paying into the system to earn their Social Security and Medicare - benefits that protect America’s middle class. Voice in the Discussion: Seniors and middle class Americans have earned a voice in any discussion about the future of Medicare and Social Security.

AARP The Future of Social Security and Medicare—will they be there for me? These programs need to be strengthened as part of a thoughtful, reasoned, and broader conversation about retirement and American values. Social Security and Medicare are much too critical for too many Americans for the President and Congress to rush in and make harmful cuts as part of another Washington budget deal. 38

AARP Thank You 39

Michael Rowett Associate State Director-Communications AARP Arkansas 1701 Centerview Drive, Suite 205 (The Redding Building) Little Rock, AR (501) (501) (Fax)