CUTS TO MEDICARE, MEDICAID, SOCIAL SECURITY, SNAP, LIHEAP

The safety net, meant to take some of the rough edges off of capitalism, that has long been a part of America is being steeply eroded.  AARP has an article listing the cuts to health and assistance programs in the Federal government.  You are urged to read the whole article because I have summarized only a small part of the listings (the URL is long but I have tested it).

President Trump unveiled his federal budget proposal Monday, which takes aim at many of the health and safety net programs that older Americans rely on. The plan sharply reduces funding for Medicare, Medicaid, Social Security Disability Insurance and food stamps.
.............................................................. 
Medicare The budget cuts $237 billion over 10 years.

Medicaid The spending proposal give states more flexibility. The plan includes:

• Repealing the Affordable Care Act’s Medicaid expansion.

Food Stamps The budget would fundamentally change the way the program works. The proposal includes:

• Slashing the Supplemental Nutrition Assistance Program (SNAP) by $213.5 billion over a decade.

Social Security The budget plan would cut $72 billion over 10 years in the Social Security Disability Insurance and Supplemental Security Income programs. 

Low Income Home Energy Assistance Program (LIHEAP)

The budget would end this program. The proposal includes:

• Eliminating the $3.4 billion annual funding.

https://www.aarp.org/politics-society/government-elections/info-2018/trump-budget-affects-seniors-fd.html?cmp=EMC-DSO-NLC-WBLTR---MCTRL-021618-F1-2763397&ET_CID=2763397&ET_RID=10705690&mi_u=10705690&mi_ecmp=20180216_WEBLETTER_Member_Control_Winner_339600_465104&encparam=DSbpmFDpjN54nJMGDfr2hTFBOcS7LNFfJGOFYJjEh%2fc%3d

MEDICARE/MEDICAID

Republicans don't like health care for the poor.  Republicans, along with Democrats and Independents, like Medicare, however

http://www.cnbc.com/2015/07/16/medicare-medicaid-popularity-high-ahead-of-birthday.html

MEDICARE FINANCES

The problems with the future financing of Medicare are well advertised and have been known for decades.  I do not support the proposal to do away with Medicare entirely and replace it with a "voucher" system.  Instead we must reduce the costs of Medicare.  One component of the $716 billion in expenses "removed" by Obama from Medicare, the so-called "Doc Fix," of reducing the payments to physicians was always unlikely and is now gone.  Hospitals, however, had agreed to cutting their costs because of increased patient "flow" from Obamacare.  There has been resistance to other cuts which were called by insulting names like "death panels" and "rationing."*  About the only cut in Medicare services proposed likely to pass is raising the age of eligibility from 65 to 67, but this could be self defeating by leaving a large group of people without health care and pushing them into emergency rooms, the highest medical cost option.  At times there is mention of tort reform to cut the costs of "defensive medicine," but this proposal never seems to gain traction.  I would hope this would get done.

More than a decade ago, a writer's group of which I was a member was nearly entirely composed of seniors.  Once we had a discussion concerning what cuts in Medicare did we think we could live with.  The unanimous choice was "rationing" of major operations, say a limit of one each of heart, liver, lung or kidney transplants and two hip or knee replacements per patient.  So far as I know, no politician has proposed such a limit.  Yes, this is rationing, but Medicare is full of rationing already as I have discussed before.**  More recently, I recently got a shot for shingles.  These are not covered by Medicare and cost me $225, but I know of five people who have had shingles, including my wife, and it is serious business.  One friend lost an eye to it, and another was on heavy doses of pain killers for a year.  I think that ultimately more rationing is inevitable.

I don't know how we get to this point, but "fixing" Medicare is going to require a stop to trying to gain political points through unpleasant names and false accusations*** and both political parties are going to have to jump off the "cliff" together.****

* http://stopcontinentaldrift.blogspot.com/2012/12/death-panels-715-billion-from-medicare.html
** http://stopcontinentaldrift.blogspot.com/2011/05/medicare-rationing.html
***  http://stopcontinentaldrift.blogspot.com/2012/10/dr.html, http://stopcontinentaldrift.blogspot.com/2012/10/the-obamacare-committee.html
**** http://stopcontinentaldrift.blogspot.com/2011/02/after-you-alphonse.html

GRANDMA

Grandmothers seem to be the epidomy or epidome of old age.  You may remember the advertisement this last couple of years of grandma in a wheel chair being dumped over a cliff.  Or you might have heard, grandma is being thrown under the bus.  But consider that the average age of women having their child was 25 in 2006.*  So lets say that a woman has her first child at 25  and that child has a first child also at 25.  The first mother then becomes a grandmother at 50.  While 50 might seem old to a, say, 17 year old, grandma is 12 years from being able to receive early Social Security and 15 years from qualifying for Medicare and probably is still working for pay.  The grandchild will be in high school by the time grandma qualifies for Medicare.  Let's say that, that child also has a first child at 25, then grandma becomes a great grandmother at the age of 75, old perhaps, but still short of the life expectancy at birth for women in the U.S. of 80.8 yrs.

Recall, however, that 25 is the average age for a woman at first birth of a child.  Even if we run the same sequence at an age of first birth by a woman of 30, she can easily become a grandmother at age 60, still two years shy of early Social Security and five years from qualifying for Medicare.  If we run the sequence for age 20, the woman becomes a grandmother at age 40, 22 years from early social Security and 25 years from Medicare coverage.  She would become a great grandmother at age 60 and a great great grandmother at age 80, still within the life expectancy of an American woman at birth.

Whereas grandmother does sound old, in life grandmotherhood normally isn't all that old. She probably is still working and doesn't qualify for even early Social Security or Medicare.  Whereas we probably should shift to great grandma for typifying old age, I doubt it will happen.



* http://www.cdc.gov/nchs/data/databriefs/db21.pdf

CAN IT HAPPEN?

There are Republicans and members of the heirarchy of the Tea Party that would like to do away with things like Social Security and Medicare, and, of course, Obamacare. Others would just like to reduce them to help balance the budget, something that must be done at some point. But would it be possible to do away with them? It is not clear that at the grass roots level that Tea Partiers share this goal, for instance (http://campaignstops.blogs.nytimes.com/2011/12/26/whose-tea-party-is-it/?nl=todaysheadlines&emc=thab1).

Suppose we got a clever Republican administration like that of Bush-43 that wanted to do away with them. I imagine that first a part of your Social Security payments would go into something like a 401k. Then more and then more until the whole thing was a 401k. Also somewhere along the line it probably would be made voluntary. So Social Security would be no more.

Medicare would suffer something equivalent to Social Security. It, no doubt, would start with vouchers as in the Ryan plan. With time because of inflation the vouchers would pay less and less of your medical expenses. And of course, it would be made voluntary at some point. And perhaps at some point the vouchers would just be discontinued.

Now the Bush-43 like administration would concentrate on convincing the voting public to go along with this plan, and they would use all the wiles they used to get us to go to war in Iraq to getting rid of Social Security and Medicare. I'm not sure what they would do, but truth would be no object just as it wasn't with us going to war in Iraq. Could this happen? I don't know, but the current candidates for the Republican presidential nomination certainly sound like they would like to do this. Perhaps they could somehow make it unpatriotic to be against doing away with Social Security and Medicare just as they did with the Iraq war.

Could it happen?

MEDICARE & RATIONING

Democrats were flushed in the 2010 election over accusations by Republicans over calling end-of-life consultations Death Panels* and that Democrats were going to ration** health care. Because Democrats were willing to do something to control health care expenses, it was time for both parties to get together and do something. Alas, the Republicans demagogued it. But there was a lot of rationing in Medicare long before the controversy in the 2010 election.

For example will Medicare cover cosmetic surgery?

Sorry, but most likely no - Medicaid pays only for diagnosed conditions, none of which those address. The surgery must address a diagnosed condition or illness and your claim that you will be psychologically damaged would need to be corroborated by an independent psychologist. And even then, I would hazard a guess Medcaid would deny the claim without a ton of supporting tests and possibly a second opinion.

How about Chiropractors? Only for subluxation of the spine.

https://questions.medicare.gov/app/answers/detail/a_id/303/~/does-medicare-cover-chiropractic-services%3F

How often can men get a PSA examination or digital examination under Medicare? Once a year.

http://www.medicare.gov/navigation/manage-your-health/preventive-services/prostate-cancer-screening.aspx?AspxAutoDetectCookieSupport=1

How often can women get a mammogram? Once a year for women over 40!

http://www.eldercareteam.com/public/648.cfm

These are some rationing actions by Medicare that I know about.

Please note that there will always be rationing of health care because the wealthy can afford more health care than the rest of us. And the very wealthy can even self insure.

To preserve some basic coverage in Medicare, more rationing will be necessary which I view as being far preferable to doing away with it by converting to a voucher program. About 15 years ago, we discussed what we might give up in Medicare to preserve it. The unanimous opinion was to put a cap on expensive operations such as organ transplants and perhaps solid body parts (spine, hips, knees).

* http://en.wikipedia.org/wiki/Death_panel

** http://www.nytimes.com/2010/12/26/us/politics/26death.html

THE PROBLEM WITH THE FEDERAL GOVERNMENT STICKING WITHIN ITS REVENUES

Senator Rand Paul says the $2.1627 trillion of Federal revenues for FY 2010 is plenty of government. Assuming that the FY 2012 Federal revenues are the same as in 2010, the military/security budget of FY 2012 of $1.2192 trillion* would be 56.4% of the Federal revenues, leaving only $0.9437 trillion ($943.7 billion) to fund the rest of the government. Even of this, about $290 billion of non-military/security interest payments on the Federal debt must be taken from the $943.7 billion leaving only $654.6 billion to fund the entire rest of the government. This sum must be used to pay entitlements (e.g. Medicare/Medicaid and Social Security) which in FY 2010 totaled $700.7 billion for Social Security and Medicare and Medicaid totaled $793 billion with Medicare being about 2/3rd of that total and Medicaid being 1/3rd.** Thus Social Security and Medicare/Medicaid payments by themselves massively exceed the $654.6 billion available for non-defense/security spending. The Social Security and Medicare/Medicaid budgets together total $1.4937 trillion or 69.1% of the $2.1627 trillion of Federal revenues, even a larger percentage than the military/security budget. The military/security and entitlement budgets together total 125.4% of the 2010 revenues, greatly exceeding the revenues available by about $550 billion. Thus nothing is available for the government as we know it, i.e. most of the discretionary budget (Departments of State, Treasury, Justice, Agriculture, Energy, Education, Interior, Commerce, National Park Service, etc. and the Administrations of EPA, NASA, etc., and such Authorities as the Tennessee Valley and Bonneville, etc. excluding the military/security budget). You could shut all these parts of the government down completely, and you would still run a deficit of about $550 billion.

To the credit of Rand Paul, he would not take Military/Security spending off the table for consideration of budget cuts though my understanding is that current plans do take them off the table; however he would not touch Social Security.*** The problem is caused to a significant extent in that Federal revenues are at a 60 year low as a percentage of GDP.**** I don’t see how we can balance the budget without tax increases in addition to budget cuts plus a rapidly increasing economy. And the budget cuts must be carefully made as they could easily push us into a recession or worse through large cuts in Federal and contractor employees and termination of contracts, many of which don’t have release clauses so will have to be paid anyway. This was true, for example, when President Obama terminated the manned missions to the moon project of NASA, though it does save follow-on contracts. * http://www.huffingtonpost.com/christopher-hellman/national-security-budget_b_829676.html.

Consider an article by charliebonds, post 353603, "2012 Military Budget 56.4% of Available" in Investment Analysis Clubs/Macro Economic Trends And Risks, 6 March 2011: For 2012, the White House has requested $558 billion for the Pentagon’s annual "base" budget, plus an additional $118 billion to fund military operations in Iraq and Afghanistan. At $676 billion, that’s already nothing to sneeze at, but it’s just the barest of beginnings when it comes to what American taxpayers will actually spend on national security. Think of it as the gigantic tip of a humongous iceberg. To get closer to a real figure, it’s necessary to start peeking at other parts of the federal budget where so many other pots of security spending are squirreled away. Missing from the Pentagon’s budget request, for example, is an additional $19.3 billion for nuclear-weapons-related activities like making sure our current stockpile of warheads will work as expected and cleaning up the waste created by seven decades of developing and producing them. That money, however, officially falls in the province of the Department of Energy. And then, don’t forget an additional $7.8 billion that the Pentagon lumps into a "miscellaneous" category -- a kind of department of chump change -- that is included in neither its base budget nor those war-fighting funds. So, even though we’re barely started, we’ve already hit a total official FY 2012 Pentagon budget request of: $703.1 billion dollars. Not usually included in national security spending are hundreds of billions of dollars that American taxpayers are asked to spend to pay for past wars, and to support our current and future national security strategy. For starters, that $117.8 billion war-funding request for the Department of Defense doesn’t include certain actual "war-related fighting" costs. Take, for instance, the counterterrorism activities of the State Department and the U.S. Agency for International Development. For the first time, just as with the Pentagon budget, the FY 2012 request divides what’s called "International Affairs" in two: that is, into an annual "base" budget as well as funding for "Overseas Contingency Operations" related to Iraq and Afghanistan. (In the Bush years, these used to be called the Global War on Terror.) The State Department’s contribution? $8.7 billion. That brings the grand but very partial total so far to: $711.8 billion. The White House has also requested $71.6 billion for a post-2001 category called "homeland security" -- of which $18.1 billion is funded through the Department of Defense. The remaining $53.5 billion goes through various other federal accounts, including the Department of Homeland Security ($37 billion), the Department of Health and Human Services ($4.6 billion), and the Department of Justice ($4.6 billion). All of it is, however, national security funding, which brings our total to: $765.3 billion. The U.S. intelligence budget was technically classified prior to 2007, although at roughly $40 billion annually, it was considered one of the worst-kept secrets in Washington. Since then, as a result of recommendations by the 9/11 Commission, Congress has required that the government reveal the total amount spent on intelligence work related to the National Intelligence Program (NIP). This work done by federal agencies like the CIA and the National Security Agency consists of keeping an eye on and trying to understand what other nations are doing and thinking, as well as a broad range of "covert operations" such as those being conducted in Pakistan. In this area, we won’t have figures until FY 2012 ends. The latest NIP funding figure we do have is $53.1 billion for FY 2010. There’s little question that the FY 2012 figure will be higher, but let’s be safe and stick with what we know. (Keep in mind that the government spends plenty more on "intelligence." Additional funds for the Military Intelligence Program (MIP), however, are already included in the Pentagon’s 2012 base budget and war-fighting supplemental, though we don’t know what they are. The FY 2010 funding for MIP, again the latest figure available, was $27 billion.) In any case, add that $53.1 billion and we’re at: $818.4 billion. Veterans programs are an important part of the national security budget with the projected funding figure for 2012 being $129.3 billion. Of this, $59 billion is for veterans’ hospital and medical care, $70.3 billion for disability pensions and education programs. This category of national security funding has been growing rapidly in recent years because of the soaring medical-care needs of veterans of the Iraq and Afghan wars. According to an analysis by the Congressional Budget Office, by 2020 total funding for health-care services for veterans will have risen another 45%-75%. In the meantime, for 2012 we’ve reached: $947.7 billion. If you include the part of the foreign affairs budget not directly related to U.S. military operations in Iraq and Afghanistan, as well as other counterterrorism operations, you have an additional $18 billion in direct security spending. Of this, $6.6 billion is for military aid to foreign countries, while almost $2 billion goes for "international peacekeeping" operations. A further $709 million has been designated for countering the proliferation of weapons of mass destruction, combating terrorism, and clearing landmines planted in regional conflicts around the globe. This leaves us at: $965.7 billion. As with all federal retirees, U.S. military retirees and former civilian Department of Defense employees receive pension benefits from the government. The 2012 figure is $48.5 billion for military personnel, $20 billion for those civilian employees, which means we’ve now hit: $1,034.2 billion. (Yes, that’s $1.03 trillion!) When the federal government lacks sufficient funds to pay all of its obligations, it borrows. Each year, it must pay the interest on this debt which, for FY 2012, is projected at $474.1 billion. The National Priorities Project calculates that 39 percent of that, or $185 billion, comes from borrowing related to past Pentagon spending. Add it all together, and the grand total for the known national security budget of the United States is: $1,219.2 billion. ** charliebonds post # 353603 in Investment Ananlysis Clubs/Macro Ecomonic Trends And Risks of Motley Fool, "Due to declining tax-receipts, increasing debt-service costs, etc., it is unlikely that US revenues in 2012 will be higher than 2010. In fact, it is unlikely they will even be the same. But let’s give the tax-collectors the benefit of doubt and say that revenues for the US Government in 2012 will be $2.1627 trillion. Therefore, the proposed military/security/ war budget of $1.2192 trillion will be 56.4% of total, available revenues." 

**http://www.bankruptingamerica.org/tag/social-security/ (Scroll down to Budget Process: Perception vs. Reality)
*** http://washingtonexaminer.com/blogs/beltway-confidential/2011/01/detailed-look-rand-paul-spending-bill He would cut the Federal budget by $500 billion.
**** http://www.suntimes.com/business/3706985-420/taxes-too-high-theyre-actually-at-60-year-low.html

"AFTER YOU ALPHONSE*

No, after you Gaston."* The president has recommended small but substantial cuts to the Federal Budget on an amount totaling only about $500 billion of the Federal Budget (Freeze the budgets of these agencies at 2011 levels. Freeze Federal Employee's salaries for two years.). Note that the $500 billion of agencies being considered for cuts (Commerce, Interior, DOD, DOE, EPA, HUD, Agriculture, etc.) is only about 40% of the Federal deficit so you could eliminate them completely and not come close to balancing the budget. The congressional opposition says he punted.

What they want is the president to propose substantial cuts in entitlements (Social Security-23% and Medicare-12%) which, along with payments on the Federal debt(11%), are a substantial part of the budget - 46% in 2003, for example.** This is the "After you Alphonse." But the president was the Republicans to propose the cuts first which is the "No, after you Gaston." Certainly, you cannot approach a balanced budget without substantial cutting of Social Security and Medicare and perhaps other entitlements (Medicaid-7%, means tested entitlements-6%, and mandatory payments such as pensions-6%).

So far Republicans have refused to approve any increased taxes, particularly on the wealthy, which must be another part of the equation toward a balanced budget.

So this is what I think may happen. The president will continue to offer small but substantial cuts to the Federal budget. Eventually there will be a horse trade with the president approving some cuts to Social Security and Medicare as well as core agencies and departments with Republicans agreeing to some increases in income tax on the wealthy and oil companies. It must be done together.

What kind of cuts? For details of the presidents proposals for 2012, see: http://www.huffingtonpost.com/2011/02/13/obama-budget-proposal-cut_n_822689.html (Scroll down to see cuts to Departments and Agencies. Note that some agencies are recommended for massive budget increases: Dept. Education - 38.5%!)

But to really get to a balanced budget, we need a rapidly growing economy with significantly increasing employment. After all, the Federal revenues as a share of the nation's economy are near a 60 year low: http://www.suntimes.com/business/3706985-420/taxes-too-high-theyre-actually-at-60-year-low.html.

Something that should be seriously considered is to let corporations repatriate foreign profits at a 5% tax rate. This might generate something like $50 billion that could be applied to the deficit, another small step but a significant one. And the repatriated funds might also add to the economy, even if they were distributed as special dividends by the corporations (but not purchase of existing stock). Although this has been mentioned, I don't know if anyone in congress or the president has actually proposed it.

* http://en.wikipedia.org/wiki/Alphonse_and_Gaston

**http://wiki.answers.com/Q/What_percentage_of_the_U.S._federal_budget_is_spent_on_entitlements