GOP's Planned Cuts to Medicaid Will Impoverish and Imperil Millions of Aging Baby Boomers and Seniors
The House Republican leadership’s Obamacare repeal bill will not only cause upwards of 24 million people to lose their health care coverage over the next decade, as the Congressional Budget Office has said, but it will also push millions of seniors already on the financial edge into deep and harsh poverty.
That time bomb would result from the law’s imposition of per capita spending limits on Medicaid recipients and its ripple effects. Currently, there are no caps on federal subsidies to that state-run program, which provides health care coverage for 70 million poor Americans, including one in five people on Medicare. (Medicaid is the federal health care program for low-income people of all ages, including, importantly, children; Medicare is the federal health care program for those age 65 and older.)
Currently, states do not ration care under Medicaid, although some red states have imposed draconian requirements to deter enrollments. But if the House GOP leadership bill imposing per capita spending limits and turning Medicaid into a block grant passes into law, the resulting funding cuts and rationing of care could impoverish millions of aging Americans.
This ambush comes in two waves.
First, the financial shockwaves from an Obamacare repeal would raise insurance costs for those over age 50, as the Congressional Budget Office found. The increase in costs comes from withdrawing federal Obamacare subsidies. Additionally, as younger, healthier people drop coverage, insurance pools would shrink, raising premiums for those covered. Higher premiums and out-of-pocket costs means aging working- and middle-class individuals would have less disposable income to put into retirement savings. That savings shortage was already quite a problem, with most households woefully unprepared to maintain their current lifestyles into retirement.
Second, an Obamacare repeal would strike another blow by limiting what federally subsidized care Americans would receive as seniors under Medicare and Medicaid. This would come after households have burned through personal savings or faced significant medical issues and end-of-life living challenges. The House Obamacare repeal cuts $880 billion from Medicaid over the next decade. What’s not widely appreciated is that one-fifth of the people on Medicare are also Medicaid recipients. They were already poor, or have become poor and fall under the program.
The Henry Kaiser Family Foundation, which focuses on health policy, issued a report Monday saying that 11 million people were in this category: Medicare recipients whose care was paid via Medicaid. This includes two out of three nursing home residents, a majority of whom are women, according to KFF's analysis, "What Could a Medicaid Per Capita Cap Mean for Low-Income People on Medicare?" Home nurses and other long-term care options “that would be unaffordable for seniors with low-incomes” are paid by Medicaid transfers to Medicare. Thus, the sickest and most vulnerable seniors stand to lose out, forcing them to turn to family, friends or strangers.
For older people with no one to help and nowhere to turn, the scenario is bleak. We may see more elderly homeless.
“Low-income people on Medicare who receive assistance from Medicaid tend to have more chronic conditions, cognitive limitations and functional limitations than others on Medicare,” KFF’s analysis said. “About six in ten (61%) need assistance with one or more activities of daily living (versus 33% of other people on Medicare), more than half (58%) have a mental condition or cognitive impairment (versus 29%), one-third (37%) have five or more chronic conditions (versus 27%), and about one in six (18%) rate their health status as poor, more than three times the rate among other people on Medicare (6%.)”
Betraying Their Base
You might think older voters would have been wiser when it came to voting for Trump, not falling for his promises he would leave senior safety nets alone. While candidate Trump repeatedly told seniors he would protect their Medicare and Social Security, he’s not doing that. Trump has gone all-in pressuring House Republicans to pass Paul Ryan’s Obamacare repeal.
Astoundingly, a huge block of older Americans went for Trump. Election Day exit polls analyzed by PewResearch.org found “Older voters (ages 65 and older) preferred Trump over Clinton 53%-45%. This is roughly the same advantage for the Republican candidate as in 2012 when older voters backed Romney over Obama 56%-44%.” Curiously, this continued a prior trend of older voters increasingly drifting toward Republicans during President Obama’s tenure.
“Today’s seniors were once Democrats,” was the heading from a 2014 report by the Gallup poll that looked at changing senior voting patterns. “In 1993, Americans then aged 45 to 79 represented the age group that today is 65 to 99. At that time, 20 years ago, those 45 to 79 were highly Democratic, with a 12-point advantage in favor of the Democrats… Over the last seven years [Obama’s term], seniors have become less Democratic, and have shown an outright preference for the Republican Party since 2010.”
Gallup said seniors were the country's largest block of “non-Hispanic whites.” Reports from the campaign trail last year, especially in states with a history of voting for Democratic presidents, found white seniors were a significant presence at Trump rallies.
“Trump has run a campaign aimed squarely and frankly at old people’s nostalgia, fear of danger, and anxiety about social change,” the Atlantic’s Molly Ball wrote in late October. “He has also appealed directly to their desire to protect their government benefits.”
Those campaign promises may turn out to be one of Trump's—and the House GOP's—biggest cons, perpetuated on millions of Americans. That's because Republicans who have dreamed of slashing the federal budget kept quiet as Trump campaigned on leaving those programs alone. Now Trump is following their script, as long as he can claim credit for repealing Obamacare.
How Bad Will It Be for Retiring Baby Boomers?
Even the demographic best prepared to enter their senior years from a fiscal standpoint—white households, many of whom voted for Trump—won’t last long under the GOP’s envisioned defunding and dismantling of Medicaid and Medicare. Whites, on average, have $142,000 in retirement savings and assets. That’s compared to average black household savings and assets of $11,000. Latino households and single women also have much smaller retirement savings.
The Kaiser Family Foundation’s analysis of cost shifts onto families if federal spending on Medicaid is gutted shows what's in store for everyone who’s not wealthy as senior living crises mount. Under Obamacare, medical bankruptcies plummeted for individuals who bought insurance on its exchanges. Additionally, the medical debts accrued by poor people on Medicaid also fell. Consider these average costs cited by KFF that are now covered by Medicaid, and envision what they would do to household savings once federal subsidies vanish.
“On a per person basis, Medicaid spent $11,419 on each low-income person on Medicare (excluding amounts spent on Medicare premiums)—nearly three times the amount it spent on other people on Medicaid ($3,941), on average, in 2012. However, Medicaid spending for low-income people on Medicare ranges greatly, from $3,781 per person, on average, for people who did not use long-term care services to $36,209 per person, on average, for those who used long-term care services."
The GOP's financial wrecking ball doesn't stop there. As Nancy Altman, a co-founder of the advocacy group Social Security Works laid out in a Huffington Post piece, House Speaker Paul Ryan’s Obamacare repeal would make insurance unaffordable for those on the cusp of being eligible for Medicare. Altman wrote:
“Some light has also been shed on Trumpcare’s impact on those seniors desperately holding on until they turn 65 and go on Medicare. A 64-year-old who earns $26,500, for example, now pays $1,700 annually for her health insurance. Trumpcare—or, for people in their early 60s, the cat food proposal—would force her to pay $14,600 for the exact same coverage. That is more than half of her income! And that is just the cost of the annual premium. It doesn’t include the cost of medication, co-pays, deductibles, or non-covered items like glasses. That doesn’t leave a whole lot left over for housing and food.”
Are Republicans so blinded by their anti-Obamacare and budget-cutting ideology that they are willing to play politics with the quality of millions of people’s lives as they enter their senior years and grapple with medical issues and long-term care? It appears they are. As politically divided as the nation seems to be, there is near-unanimity among seniors that Medicare and Social Security should not only be protected, but if anything, their benefits are insufficient and should expand.
No Partisan Political Divide Here
A March 2017 report by the National Institute of Retirement Security found nearly 90 percent of Democrats and Republicans worried about how they would pay for their health care and long-term care expenses in their senior years. NIRS wrote:
“Some 88 percent Americans agree that the rising cost of long-term care is a major factor that makes preparing for retirement more difficult, slightly up from 85 percent in 2015. For respondents that identified themselves as Democrats, 91 percent agreed that it is a major factor and 89 percent of Republicans agreed. Americans say other factors that make retirement more difficult are: salaries not keeping up with the cost of living (83 percent), increasing debt from student loans, housing or credit cards (81 percent), fewer pensions (64 percent), living longer (64 percent), funding and managing their retirement savings on their own (52 percent), and stock market volatility (44 percent). Here again, Democrats and Republicans alike consistently agree on the level of importance of these factors in making retirement more difficult.”
The report cites other federal agencies’ findings that affirm how deep the retirement security crisis is, underscoring how House Republicans are fabricating and fomenting an unnecessary crisis while ignoring a very real one.
“About half of households age 55 and older have no retirement savings,” the federal Government Accountability Office notes. “When all households are included—not just households with retirement accounts—the median retirement account balance is $2,500.”
There are more striking statistics to consider. A retirement account balance of $100,000 translates into less than $400 a month in income to supplement Social Security, NIRS said. Its surveys found that about half of Americans felt a pension paying $2,200 a month was “about right.” However, most American retirees have nowhere near a half-million dollars in investment accounts and equity, the sum needed for that level of middle-class pension. The average monthly Social Security benefit for retirees in January 2017 was $1,317.
In other words, House Republicans are poised to make a preexisting retirement security crisis much worse by foisting escalating health care costs onto millions of already stressed seniors. As if that's not enough, after Obamacare, the House Republicans are mulling going after Social Security, NIRS notes, citing numerous statement by Ryan and other House GOP leaders.
“There is discussion of further benefit cuts,” the NIRS report said. “Almost 22 percent of people age 65 and older live in families that depend on Social Security benefits for 90 percent or more of their income. Another 24 percent receive at least half, but less than 90 percent, of their family income from Social Security. Reliance on Social Security increases with age, with 30% of persons aged 80 and older depending on Social Security for 90% or more of family income. In 2012, Social Security kept almost a third of older Americans out of poverty.”
By repealing Obamacare, House Republicans and Trump are poised to push millions of aging and elderly Americans into an accelerating downward slide into poverty. If they are successful in undermining President Obama's major domestic achievement, who knows what will come next.