AARP holds forum on Social Security and Medicare
The American Association of Retired Persons presented information and gathered opinions on proposals for reforming Social Security and Medicare in a forum at The Valley House north of Hudson on Wednesday, June 27.
About 50 retired people attended the 90-minute program hosted by staff members from AARP's Wisconsin and Minnesota offices. A show of hands indicated that the majority were AARP members who learned about the event through a postcard mailing.
"You've earned a say to make your voice heard about the future of Medicare and Social Security," said Lisa Lamkins, the advocacy director from the Wisconsin office, echoing the theme of AARP's nationwide "You've Earned a Say" outreach.
"Today is really all about you," Michele Kimball, AARP's Minnesota director, told the group.
Kimball said members of Congress have been talking about changing Social Security and Medicare as part of a budget deal, but have said little about how the changes would affect seniors and their families.
"We say that isn't right," Kimball said. "You have earned the right to let your representatives know what you think should be done to ensure that they (Social Security and Medicare) are here, not only for you, but for future generations."
The forum participants received booklets on the federal programs containing what AARP describes as "balanced information" on the proposals being debated -- "the pros and cons, without the political jargon and spin."
Amy McDonough of the AARP Minnesota office presented some of the proposals for reforming Social Security and invited comments from the audience about them.
Lamkins, from the AARP Wisconsin office in Madison, led a similar review of proposed Medicare changes.
The situation facing Social Security is that people are living longer and there are fewer workers per beneficiary to support the program.
Today, there are 2.8 workers for each person who receives Social Security benefits, and the ratio will be 2.1 workers for each beneficiary by 2036, according to AARP.
But even if nothing is done, Social Security can pay full benefits for nearly 25 years, provided that the U.S. Treasury pays back the money it's borrowed from the trust fund, McDonough said. After that, the program will be able to pay about 75 percent of promised benefits for the next 75 years and beyond.
Raising the full retirement age to 68 by the year 2028 is one of the solutions being considered.
Another would raise the cap on annual earnings subject to the Social Security payroll tax. Earned income above $110,100 currently isn't taxed. If all earned income was taxed, 86 percent of the projected Social Security funding gap would be filled, according AARP.
Reducing benefits for people with the highest life-time earnings and increasing the payroll tax rate are other proposals under consideration.
Employees currently pay a 4.2 percent tax on their earnings. Congress has temporarily reduced the payroll tax from 6.2 percent in an effort to stimulate the economy.
At the end of the year, the rate is set to return to 6.2 percent for both employees and employers.
McDonough said the Social Security Trust Fund hasn't been affected by the payroll tax cut, however, because federal general revenue has been used to make up the difference.
Opinions on how to best to close the anticipated long-term Social Security funding gap varied widely.
One man said the cap on taxable earnings should be raised.
Workers on the bottom of the economic scale haven't gotten pay increases over the past couple of decades, while income for those at the top has risen sharply, he said.
McDonough said the argument against raising the cap is that it would increase taxes on people who some consider to be middle class.
"There's a big debate over who the high-earners are," she said.
Six percent of workers earn more than the current cap of $110,100, according to the material AARP provided.
McDonough said people also argue that raising the cap would hurt small businesses, because they have to match the Social Security taxes paid by their employees.
Retired Hudson dentist Jeff Hitchcock suggested raising the cap for individuals, but not businesses.
A woman who said she didn't retire from her job at a Twin Cities hospital until she was 70 favored increasing the retirement age.
"Today, people are much healthier," she said. "People are going to be living to 100."
Another woman, a retired educator, said increasing the retirement age would make it even harder for young people to find jobs in a tough economy.
"Jobs aren't available for young people because some of us are staying in too long," she said.
Further increasing the retirement age would be a hardship for people who work in physically demanding jobs, a man added.
"If you're older, you're going to feel aches and pains," he said. "It isn't fair to the large portion of the population."
A woman suggested that young people be given the opportunity to opt out of the traditional Social Security program and invest their payments in the stock market.
McDonough said the push for privatizing Social Security diminished greatly following the 2008 financial crisis and decline in the stock market.
According to an AARP fact sheet, there are currently 1,061,501 Social Security recipients in Wisconsin. Retirees account for 67.5 percent of the recipients; disabled workers, 14.8 percent; widows and widowers, 7.7 percent; and dependent children and parents make up the remaining percent.
Close to a quarter of recipients (23.6 percent) rely on Social Security for 90 percent or more of their income. More than half (57 percent) rely on Social Security for half or more of their income.
Lisa Lamkins from the AARP Wisconsin office said the Medicare program that pays for health care for retirees is facing a more serious funding gap down the road than Social Security. It will have a funding shortfall in 12 years if revenues aren't increased or expenditures cut, or some combination of the two, she said.
Lamkins said 42 percent of Medicare funding comes from general federal taxes and 37 percent from employee payroll taxes. Medicare spending makes up about 14 percent of the federal budget, she said.
The challenges facing the program include rising health care costs and a growing population of old people.
The AARP booklet on the future of Medicare distributed to forum participants listed 15 proposals being talked about in Washington.
Lamkins said fraud costs the Medicare program an estimated $50 billion a year.
Joan Schneider of River Falls said the Affordable Care Act includes measures to reduce fraud.
Richard Marzolf of the town of Troy said the administrative costs of for-profit health care organizations are too high.
The retired health care worker said the non-profit organization she worked for kept its administrative costs at 9 to 10 percent.
The mother of a construction worker said her son doesn't have health insurance. She was opposed to raising the eligibility age for Medicare.
The retired health care worker said some patients don't follow the orders of their doctors when they are released from the hospital and end up returning in a short time.
"The patient should help, too. It shouldn't be all one-sided," she said.
"I don't think we should be paying more for medical care. We already pay plenty," a man offered.
Another said, "In general, I'm in favor of means testing. The super wealthy have not paid their share."
Mary Marzolf of Troy encouraged seniors to draft end-of-life directives, so loved ones know their wishes and don't spend money on futile efforts to keep them alive.
Another woman said she cared for her husband at home the last three months of his life.
"I think the future is what we make it. Let's do the best you can for yourself," she said to a smattering of applause from the retirees.
Lamkins brought up the premium support plan proposed by U.S. Rep. Paul Ryan, R-Wisconsin, and asked the retirees what they thought of it.
"It would get rid of a lot of government employees that we don't need," a man said.
Under the plan, retirees would receive a voucher to buy health insurance from private companies.
Lamkins said an argument against the proposal is that it wouldn't control health care costs and seniors could be burdened with more out-of-pocket expenses for their care.
Much more information on the proposals for shoring up funding for Social Security and Medicare is available on AARP's www.earnedasay.org website.