Press Center: News Releases
AARP Letter on the 2007 Budget Mark-Up
News Release
March 8, 2006
The Honorable Judd Gregg
Chairman
Budget Committee
United States Senate
624 Dirksen Senate Office Building
Washington, DC 20510
Dear Mr. Chairman:
AARP and its 36 million members are concerned with the impact that some proposals in the President’s fiscal year 2007 budget could have on the health care and economic security of older Americans. We believe that deficit reduction is the right goal, but we should focus our efforts on changes that will better target the underlying causes of our budget deficits, not simply shift problems elsewhere.
We are particularly concerned about proposals to cut Medicare that would ignore the fact that unsustainable growth in health care spending throughout the system is the root of the problem. Eroding Medicare’s financial protection does nothing to address the systemic problem. We should reject as inadequate proposals that simply shift more cost on to Medicare and Medicaid beneficiaries, providers, employers, or state and local governments.
AARP urges the Committee to reject one such proposal—creation of an arbitrary spending cap in the Medicare program. The Medicare Modernization Act (MMA) established a warning system that notifies the Administration and the Congress when federal spending for Medicare exceeds 45 percent. This notification recognizes that Congress and the President should take responsibility for examining the factors driving increases in national health care spending. The MMA wisely stopped short of imposing any arbitrary reduction in spending tied to this cap. Proposals that would impose automatic arbitrary cuts to program spending would be harmful to the health of more than 42 million Americans who rely on Medicare for their health insurance. In addition, arbitrary cuts would simply lead to cost-shifting and would fail to address the real culprit of rising health care costs.
AARP also urges the Committee to reject proposals to eliminate the indexing of incomerelated Part B premiums. The MMA established and indexed the high income premium levels to assure that only those Medicare beneficiaries in the highest income brackets would be asked to pay a higher Part B premium. Similar to the problems faced in the current AMT debate by the failure to index tax thresholds, eliminating the indexing would dramatically lower the income threshold over time and subject an increasing number of middle income beneficiaries to a much higher Part B premium.
The Medicare Payment Advisory Commission has recommended a series of reductions to Medicare provider reimbursements. If the Committee considers assuming any of these proposed reductions, we urge you to direct that a portion of the savings be reinvested in Medicare to make improvements in the program and lessen the impact of changes on beneficiaries.
We also oppose additional Medicaid cuts that would adversely impact many of our most vulnerable citizens. In addition, the Medicaid changes would again merely shift costs and further compound the harm from the changes recently enacted in the Deficit Reduction Act of 2005.
Although procedural obstacles will prevent consideration of changes to Social Security benefits in the budget resolution, AARP would like to make clear our opposition to several proposals in the President’s budget that would make changes to Social Security, including continued efforts to establish private accounts with money diverted from Social Security. Rather than helping restore long term solvency, "carve-out" private accounts worsen Social Security’s long-term financing. We also urge the Committee to reject proposals that eliminate Social Security’s lump sum death benefit or require full-time school attendance after age 16 in order to receive child’s benefits.
AARP also asks the Committee to reject attempts to eliminate or drastically reduce vital nutrition, housing and energy assistance programs for the elderly and other low income Americans. In particular, we find it alarming that the FY 2007 budget proposes to eliminate the Commodity Supplemental Food Program (CSFP), which provides monthly food packages to more than 420,000 seniors and 50,000 pregnant women and young children, and slashes the Section 202 low-income elderly housing program by nearly 30 percent. Given record increases in home energy costs, we also strongly oppose proposals to cut energy assistance and weatherization by more than $1.3 billion over the next five years.
Finally, in order for deficit reduction to be balanced, it must look at both the spending and revenue sides of the ledger. AARP urges the Committee to consider including budget enforcement provisions in the budget resolution that would reinstate the balanced PAYGO rules that were in force until 2002. These rules ensured that both entitlement spending and tax changes would not add to the deficit, and they were effective because they applied the same scrutiny to both spending and revenues.
We look forward to working with you to craft a budget resolution that is effective in reducing projected deficits, treats all Americans fairly and does not jeopardize the health care or economic security of Medicare and Medicaid beneficiaries.
Sincerely,
William D. Novelli
Chief Executive Officer