Testimony to senate special committee on aging hearing

We believe that Social Security benefits were always intended to be there in both good times and bad. It also is important to note that the next generation has paid into Social Security for

decades and deserves to get the retirement benefits they have already earned. With shrinking pensions, dwindling savings, diminished assets and longer life expectancies, future generations

will depend on Social Security even more. Senator, it goes without saying, your urgent attention to strengthening Social Security for the long term is necessary and greatly appreciated.

MEDICARE Let me turn next to the Medicare program and some recent proposals being considered by Congress. Medicare was created in 1965 and plays a vital role in ensuring the health and

retirement security of older Americans and people with disabilities in current and future generations. Medicare covers persons age 65 and older, regardless of their income or medical

history, and now covers 47 million Americans, helping individuals pay for needed health care services.  Nearly half of all people on Medicare (47%) live on incomes below $21,660 for an

individual and $29,140 for couples. About 29 percent of all people on Medicare have a cognitive/mental impairment and about the same percent report being in fair or poor health. According to

the most recent data available, Medicare beneficiaries spent a median of $3,103 a year of their own money on health care in 2006. Ten percent of beneficiaries – more than 4 million people –

spent more than $8,300 a year. The oldest and poorest beneficiaries spent about one-quarter of their incomes on health care. _Independent Payment Advisory Board_ As you know, AARP supported

the Affordable Care Act last year because it will improve and strengthen Medicare and provide Americans who currently lack health insurance access to affordable, comprehensive health

insurance.  President Obama recently suggested that the Independent Payment Advisory Board (IPAB), established under the new law, be expanded. AARP agrees with many of the Independent

Payment Advisory Board’s original goals — extending Medicare solvency, slowing cost-growth and improving quality without reducing benefits or increasing cost-sharing for people in Medicare.

However, we remain concerned about the spending targets the IPAB must meet in its second ten years and the unintended impact these savings targets might have on beneficiaries’ access to or

quality of care. We would have strong concerns with expanding the role of this unelected, unaccountable board. We will carefully monitor how these proposals move forward to ensure that

Medicare is protected and strengthened for the millions of people who depend upon it. Other proposals are being considered in Congress that would greatly expand the cost-sharing on

beneficiaries, significantly increasing their out-of-pockets costs for Medicare. We do not believe the answer is to simply shift costs onto Medicare beneficiaries and increase the health and

economic insecurity of millions of Americans. Increasing the out-of-pocket costs for people on Medicare would especially penalize the sick. _House-Passed Fiscal Year 2012 Budget Resolution_

Before it left for recess, the House passed the Fiscal Year 2012 House Concurrent Budget Resolution (H. Con. Res. 34), which, among other things, would eliminate the current Medicare

program for those turning 65 in the year 2022 and after, and replace it with a defined contribution, “premium support” program, with the government’s contribution growing each year by the

rate of inflation.  AARP finds the direction of this House-passed budget disturbing and in some cases misguided. First, we are concerned that a premium support system would dramatically

increase costs for Medicare beneficiaries while removing Medicare’s promise of secure health coverage – a guarantee that future seniors have contributed to through a lifetime of hard work.

Under this proposal, premium payments to private plans would be sharply reduced, capped at levels well below medical inflation. Therefore, Medicare beneficiaries would bear a larger and

larger share of the high cost of medical inflation, as increased costs will be shifted to them – making it harder and harder for them to pay for other household expenses. According to an

calculations based on the Congressional Budget Office analysis, the House-passed budget would more than double beneficiary costs in 2022, from about $5,500 to $12,500 – an increase of

roughly $7,000 per year in beneficiary premiums and co-insurance. The legislation would also increase the age of Medicare eligibility from 65 to 67 by 2033. Those who enter Medicare before

2022 would continue under the current Medicare program, with the option to switch to the new program. AARP opposes raising the age of eligibility for the Medicare program because, according

to research, it would: * Increase the cost burden for 65 – 66 year olds who no longer have access to Medicare. * Increase premiums and cost sharing for Medicare enrollees. * Raise costs for

states, employers and for people under 67 purchasing coverage on the individual market. * Produce relatively little in savings to the federal government. Finally, the House-passed budget

repeals key improvements in the Affordable Care Act, but the two I would like to speak to today are the closure of the “coverage gap”, or the doughnut hole, in Medicare Part D and

eliminating the Community Living Assistance Services and Supports (CLASS) program. AARP fought to close the doughnut hole because it provides millions of seniors with access to lower

out-of-pocket costs for their prescription drugs. Repealing the doughnut hole provision would immediately increase the prescription drug costs for nearly 4 million Medicare beneficiaries.

The CLASS program is a national voluntary insurance program to help individuals pay for some of the costs of services and supports to help them live in their homes and communities. It has

the potential to: provide savings to Medicaid; support family caregivers in their care giving roles; and help to give eligible consumers choice and control and a flexible benefit to help

them meet their needs.  Senator, abandoning relief from the doughnut hole and taking away an option to help people live in their homes by repealing the CLASS Program does not bode well for

older adults. The added burden of higher health costs will put more seniors at risk, especially those who are most vulnerable. MEDICAID As for Medicaid, under the House-passed budget

resolution, all federal Medicaid payments to states would be converted to a block grant beginning in 2013, with constrained annual growth.