Dismantling Social Security & Medicare

In America, we have long cherished the basic promise that if you play by the rules and pay your taxes, you have the opportunity to retire with security. But in the Kochs’ utopia, that doesn’t seem to be part of the bargain.

The Kochs and their main political group, Americans for Prosperity, have repeatedly made it clear that even Medicare and Social Security aren’t institutions worth protecting.

AFP’s war on seniors came into focus in 2011 when they endorsed Paul Ryan’s plan to replace Medicare with a voucher plan. It was a plan that Wall Street Journal said “would essentially end Medicare.” The nonpartisan Congressional Budget Office estimated that the plan would end up more-than-doubling the out-of-pocket costs to a typical 65-year old Medicare beneficiary by 2022.

And even after all this, AFP supported Ryan’s budgets the following two years as well, which contained very similar plans, as well as a plan to increase the Medicare eligibility age.

As if all their attacks on Medicare weren’t bad enough for seniors, the Kochs’ AFP disparaged Social Security in a “Legislative Alert,” saying: “The simple fact of the matter is that Social Security is a broken and antiquated program.”

Millions of American seniors who rely on Social Security to put food on the table and keep a roof over their heads may disagree.

Medicare

Americans for Prosperity Supported Voucherizing Medicare

2011

2011: AFP Backed FY 2012 Ryan Budget, Which Replaced Medicare With A Premium Support Plan. According to AFP’s congressional scorecard for the 112th Congress, AFP took a “yes” position the House vote on House Budget Committee Chairman Paul Ryan’s (R-WI) proposed budget resolution covering fiscal years 2012 to 2021 which included a proposal to replace Medicare with a premium support plan. According to the Congressional Research Service, “Under the new system, Medicare would pay a portion of the beneficiaries’ premiums, i.e., provide ‘premium support.’ The payments would be adjusted for age, health status, and income and would be paid directly by the government to the insurance plan selected by the Medicare beneficiary. In addition, plans with healthier enrollees, would be required to help subsidize plans with less healthy enrollees.” The vote was 2011 House vote 277. [AFP Scorecard for the 112th Congress, 2/1/13; CRS Report #R41767, 4/13/11]

  • Wall Street Journal: Ryan Plan “Would Essentially End Medicare.” According to the Wall Street Journal, “Republicans will present this week a 2012 budget proposal that would cut more than $4 trillion from federal spending projected over the next decade and transform the Medicare health program for the elderly, a move that will dramatically reshape the budget debate in Washington. […] The plan would essentially end Medicare, which now pays most of the health-care bills for 48 million elderly and disabled Americans, as a program that directly pays those bills. Mr. Ryan and other conservatives say this is necessary because of the program’s soaring costs.” [Wall Street Journal, 4/4/11]
  • Ryan’s Budget Eliminated Traditional Medicare And Created A Medicare Exchange On Which Seniors Could Purchase Private Plans. According to the Congressional Research Service, “Individuals who become eligible (based either on age or disability) for Medicare in 2022 and later years would not be able to enroll in the current Medicare program. Instead, they would be given the option of enrolling in a private insurance plan through a newly established Medicare exchange.” [CRS Report #R41767, 4/13/11]
  • Under Ryan’s Medicare Plan, Size Of Premium Support Payment Would Be Reduced In Line With Each Recipient’s Income. According to CBO, “The premium support payments [in the Ryan budget] would also vary with the income of the beneficiary. People in the top 2 percent of the annual income distribution of the Medicare-eligible population would receive 30 percent of the premium support amount described above; people in the next 6 percent of the distribution would receive 50 percent of the amount described above; and people in the remaining 92 percent of the distribution would receive the full premium support amount.” [CBO, 4/5/11]
  • The Budget Would Index The Premium Supports To Overall Consumer Prices. According to the CBO, “the proposal would convert the current Medicare program to a system under which beneficiaries received premium support payments—payments that would be used to help pay the premiums for a private health insurance policy and would grow over time with overall consumer prices.” [CBO, 4/5/11]
  • CBO Estimated That, In 2022, When Voucher Plan Went Into Effect, Ryan’s Medicare Plan Would More Than Double A Typical 65-Year-Old Medicare Beneficiaries’ Out-Of-Pocket Costs, Increasing Them By $6,350 Per Year. According to the Center on Budget and Policy Priorities, “CBO also finds that this beneficiary’s [a typical 65-year-old] annual out-of-pocket costs would more than double — from $6,150 to $12,500. In later years, as the value of the voucher eroded, the increase in out-of-pocket costs would be even greater.” [Center on Budget and Policy Priorities, 4/7/11]

2012

2012: AFP Backed FY 2013 Ryan Budget, Which Proposed Raising The Medicare Eligibility Age To 67 By 2034. According to AFP’s congressional scorecard for the 112th Congress, AFP took a “yes” position on the House vote on House Budget Committee Chairman Paul Ryan’s (R-WI) proposed budget resolution covering fiscal years 2013 to 2022 which included a proposal to increase the Medicare eligibility age to 67 by 2034. According to the Congressional Research Service, “The budget proposal would gradually increase the Medicare eligibility age to 67. Beginning in 2023, the age of eligibility for Medicare would increase by two months each year until it reached 67 in 2034.” The vote was 2012 House vote 151. [AFP Scorecard for the 112th Congress, 2/1/13; CRS Report #R42441, 3/29/12]

  • CBPP: Increasing Medicare Eligibility Age Would Leave Many 65- And 66-Year-Olds Uninsured. According to the Center on Budget and Policy Priorities, “This means 65- and 66-year-olds would have neither Medicare nor access to health insurance exchanges in which they could buy coverage at an affordable price and receive subsidies to help them secure coverage if their incomes are low. This change would put many more 65- and 66-year-olds who don’t have employer coverage into the individual insurance market, where the premiums charged to people in this age group tend to be extremely high — thereby leaving many of them uninsured.” [Center on Budget and Policy Priorities, 3/20/12]
  • Raising The Medicare Eligibility Age To 67 Would Have Resulted In $3.7 Billion In Increased Out-Of-Pocket Costs To Seniors Aged 65 And 66. According to the Kaiser Family Foundation, “In the aggregate, raising the age of eligibility to 67 in 2014 is projected to result in an estimated net increase of $3.7 billion in out of -pocket costs for those ages 65 and 66 who would otherwise have been covered by Medicare. [Kaiser Family Foundation, 7/11]
  • Costs To Employers Would Increase By $4.5 Billion And Costs To States By $700 Million. According to the Kaiser Family Foundation, “costs to employers are projected to increase by $4.5 billion in 2014 and costs to states are expected to increase by $0.7 billion.” [Kaiser Family Foundation, 7/11]
  • Increasing The Medicare Eligibility Age Would Raise The Costs Of Healthcare Across The Economy. According to the Center on Budget and Policy Priorities, “raising Medicare’s eligibility age would not only fail to constrain health care costs across the economy; it would raise them. Medicare provides health coverage more cheaply than private health insurance plans because it has lower administrative costs and pays less to providers. Raising the Medicare age would shift costs to most of the 65- and 66-year olds who would lose Medicare coverage, to remaining Medicare beneficiaries, to employers that provide coverage for their retirees, and to states. These cost increases would, in total, more than offset the savings to the federal government.” [Center on Budget and Policy Priorities, 3/28/12]

2013

2013: AFP Backed FY 2013 Ryan Budget, Which Replaced Medicare With A Premium Support Plan. According to AFP’s congressional scorecard website, AFP took a “yes” position on the House vote on House Budget Committee Chairman Paul Ryan’s (R-WI) proposed budget resolution covering fiscal years 2014 to 2023, which included a proposal to replace Medicare with a premium support plan. According to the House Budget Committee, “Beginning in 2024, for those workers born in 1959 or later, Medicare would offer them a choice of private plans competing alongside the traditional fee-for-service option on a new Medicare Exchange. Medicare would provide a premium-support payment either to pay for or to offset the premium of the plan chosen by the senior.” The vote was 2013 House vote 88. [AFP Scorecard website, viewed 5/7/14; House Budget Committee, 3/12/13]

  • March 2013: AFP President “Commended” Ryan On His FY 2014 Budget, Saying He Had Presented A “Bold Reform Plan To Preserve Medicare and Medicaid.” According to a March 2013 Americans for Prosperity blog post, “Arlington, VA – Today Americans for Prosperity, the nation’s largest grassroots advocate for economic freedom, released the following statement from AFP president Tim Phillips: ‘Budget Chair Paul Ryan should be commended for once again crafting a serious federal budget that begins reining in government overspending, which is the greatest threat to economic prosperity our nation faces. Others talk about needed entitlement reform, but Chairman Ryan actually presents a bold reform plan to preserve Medicare and Medicaid for our nation’s elderly and poor, while making necessary changes to save tax dollars and avoid seeing these programs go bankrupt. In addition, the Ryan budget repeals the President’s expensive Washington, D.C. takeover of our health care. We urge the chairman to reject the $620 billion in new taxes negotiated by the Obama Administration during the fiscal cliff deal. For years our government has been grievously overspending, and that behavior should never be reinforced by allowing more tax dollars to be taken from the American people. Our hope is that the Senate – which has not passed a budget in four years – look to the Ryan plan as a framework for their own proposal’” (unnecessary internal quotation marks omitted). [AFP Blog post, 3/12/13]
  • CBPP: Ryan’s Medicare Policies in FY 2014 Budget “Essentially The Same As Those In Last Year’s Ryan Budget.” According to the Center on Budget and Policy Priorities, “The Medicare proposals in the 2014 budget resolution developed by House Budget Committee Chairman Paul Ryan (R-WI) are essentially the same as those in last year’s Ryan budget.” [CBPP, 3/15/13]
  • A Similar Provision in Ryan’s FY 2013 Budget Created A Medicare Exchange Where Beneficiaries Could Choose From Private Insurance Or A Fee For Service Model. According to CRS, “Individuals who become eligible (based either on age or disability) for Medicare beginning in 2023 would be given the option of enrolling in a private insurance plan or a traditional fee-for-service option through a newly established Medicare exchange. These plans would be required to offer standard benefits that are at least actuarially equivalent to traditional fee-for-service benefits, and to accept all people eligible for Medicare who apply regardless of age or health status. [CRS, 3/29/12]
  • Ryan’s Budget Would Have Benchmarked Premium Support Amount To The Second Lowest Premium On The Medicare Exchange. According to the House Budget Committee, “The benchmark plan would be either the second-least-expensive private plan or fee-for-service Medicare, whichever cost less. If a senior chose a more expensive plan than the benchmark, he or she would pay the difference between the subsidy and the monthly premium. And if a senior chose a plan less expensive than the benchmark, he or she would receive a rebate for the difference. Medicare would offer higher payments depending on the patient’s health history and the cost of living. And it would require private plans to cover at least the actuarial equivalent of the benefit package offered by the fee-for-service option.” [House Budget Committee, 3/13]
  • Ryan Budget’s Medicare Proposal Would Have Resulted In Increased Costs Or Reduced Benefits For Seniors If The Cost Of Insurance Rose Faster Than GDP Growth Plus 0.5 Percent. According to the Center on Budget and Policy Priorities, “The Ryan budget would limit the growth rate of Medicare spending for new beneficiaries from year to year, starting in 2024, to the growth rate of gross domestic product (GDP) per capita plus one-half percentage point — an amount that will likely fall short of the actual growth of health care costs. In its analysis of the similar premium support proposal in last year’s Ryan budget, the Congressional Budget Office (CBO) projected that federal Medicare expenditures on behalf of an average new beneficiary would be $400 to $700 (6 to 11 percent) less than under current law in the proposal’s first year, $1,200 to $2,200 (14 to 23 percent) less in 2030, and $5,900 to $8,000 (35 to 42 percent) less in 2050. Since under the Ryan budget, Medicare would no longer make payments to health care providers such as doctors and hospitals, the only way to keep Medicare cost growth within the target of GDP growth plus one-half percentage point would be to limit the annual increase in the amount of the premium-support vouchers. As a result, the vouchers would purchase less coverage with each passing year, pushing more costs on to beneficiaries. Over time, seniors would have to pay more to keep the health plans and the doctors they like, or they would get fewer benefits”(footnotes omitted). [Center on Budget and Policy Priorities, 3/15/13]

Social Security

AFP Foundation Advocated Privatizing Social Security. According to an Americans for Prosperity Press Release: “Personal accounts would allow millions of younger workers to have part of their Social Security taxes automatically invested in secure, diversified bond funds and stock funds, similar to what many workers already do with 401(k) plans and Individual Retirement Accounts (IRAs).” [PR Newswire, Americans for Prosperity Press Release, 6/6/2005]

AFP Endorsed Privatization of Social Security. According to Americans for Prosperirty: “Personal Retirement Accounts (PRAs) would allow younger workers to voluntarily put part of their payroll taxes into highly diversified stock and bond funds that will almost certainly grow at a much higher rate of return than the current system. Americans for Prosperity has endorsed PRAs in its Social Security Reform Principles, which can be viewed at the group’s online Social Security reform hub, http://www.socialsecurityforall.com/ .” [PR Newswire, Americans for Prosperity Press Release, 3/14/2005]

AFP Foundation Supports Private Social Security Accounts. According to Americans for Prosperity Foundation, “Thankfully, there is a better way. We could empower workers with a choice: stay with the tax-and-benefit system of Social Security as it is now, or save and invest your same payroll tax contributions through a personal savings account. Instead of seeing their hard-earned dollars funneled through Washington to pay for current retirees’ benefits, workers would truly own and control the accumulated funds and could invest them with a wide variety of investment funds offering different mixes of stocks and bonds and different levels of risk and reward.” [AmericansForProsperityFoundation.com, February 2012]

Paid for by American Bridge 21st Century Foundation