April 03, 2013
The following is a letter that was sent to Rep. Susan Brooks’ office and newspapers in her home state of Indiana.
To the Editor,
In a recent talk to Tipton, IN, residents about “entitlement” reform, Rep. Susan Brooks suggested “needs-testing” Medicare to ensure that the wealthy are not receiving benefits. She went on to say “When it was created, they didn’t expect people to depend on the program for their medical care… There are not enough young people paying into the program.”
Assuming that Rep. Brooks meant means-testing instead of “needs-testing,” she might want to clarify whom she means by the wealthy. Fewer than 6 percent of seniors have over $60,000 in non-Social Security income. Removing them from the pool of Medicare beneficiaries would have little effect on the program’s long-term cost projections. To significantly curb expenses under needs-testing, benefits would have to be cut for people who have much less income – in fact, as little as $40,000 per year.
As it stands, the cost controls put into place by the Affordable Care Act allow the Medicare trust funds to pay full benefits through 2024 and close to full benefits from then on. As well, the latest data from the non-partisan Congressional Budget Office show that the rate of Medicare cost growth has slowed sharply in recent years. If the cost growth continues at the current rate, most of the projected long-term budget deficits disappear. In other words, there is little point in cutting the much-needed benefits of those making less than $60,000 in the name of deficit reduction that is already happening.
Also, when Medicare was created by Congress in 1965, they knew the baby boomers would eventually retire and depend upon these programs. As President Johnson stated, “And through this new law… every citizen will be able, in his productive years when he is earning, to insure himself against the ravages of illness in his old age.” They also anticipated the increase in life expectancy we have seen since then. Neither of these factors has impacted the program in ways that were not planned for.
I encourage Rep. Brooks to accurately describe the nature of the benefit cuts she is proposing and the people who will be affected. Simply offering unspecified cuts in the name of deficit reduction does a disservice to her constituents, many of whom depend on these vital social insurance programs in their retirement.
Sincerely,
Dean Baker
Co-Director
Center for Economic and Policy Research
