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Friday Alert 6/17/05
Alliance for Retired Americans
888 16th Street, N.W. - Washington DC, 20006 - (202)
974-8222 - www.retiredamericans.org
GOP Looking for Ways Out on Social Security
President Bush's public overtures for bipartisanship in
overhauling Social Security took a harsh turn this week when he lashed out at
Democrats for their "obstruction" at a GOP fundraiser. The President may have
publicly excoriated Democrats, but the current stalemate on Social Security is
far more deep rooted. The administration's staged campaign events before
pre-screened audiences have failed to build any real momentum behind its Social
Security proposals. Americans are increasingly resistant to President Bush's
ideas for private accounts and benefit cuts; his approval ratings on the issue
have reached new lows. Democrats, emboldened by public opinion, unanimously
oppose private accounts, and many Republicans fearing voter backlash in the
mid-term elections are reluctant to act on the politically explosive topic.
Congressional leaders and White House aides are now privately considering
ways to abandon efforts to restructure Social Security, according to The
Washington Post. By blaming Democrats, Congressional aides say the President is
preparing for the potential failure of his top domestic priority, the Post
reports. A May 2005 Time magazine poll found 46% of Americans trusted Democrats
to reform Social Security compared to 35% for Republicans.
Congress Maneuvers Around Opposition to Private
Accounts
Realizing President Bush's plan for private accounts has little hope of passing,
Congressional Republicans are looking to salvage a modest victory on Social
Security. The Senate is focused on solvency by raising the retirement age to age
69 and cutting benefits. The House is concentrating on a broad package of
reforms that address retirement security. According to The Wall Street Journal,
conservative Republicans Sen. Jim DeMint (R-SC), Sen. Rick Santorum (R-PA) and
Rep. Tom DeLay (R-TX), who staunchly support private accounts, are preparing to
introduce legislation that would use Social Security's current surplus to create
private accounts, a move that would worsen Social Security's projected future
shortfall.
Medicare's Rx Benefit Back in the Bully Pulpit
With sinking approval ratings among seniors thanks to the President's Social
Security proposals, the White House turned its spotlight to Medicare's drug
benefit, scheduled to begin in January 2006. The drug plan, a centerpiece of the
controversial 2003 Medicare law, is an intricate web of private insurance
companies providing coverage to Medicare's 40 million beneficiaries. Hundreds of
insurers, anxious to tap into Medicare's lucrative drug market, have applied to
provide drug coverage. President Bush praised the "modernization" private
insurers would provide through "choice," but advocates warned that seniors would
ultimately be disappointed with the complexity and limited coverage of the
benefit. "Seniors can expect a steep learning curve with this drug benefit,"
said Ruben Burks, secretary-treasurer of the Alliance for Retired Americans. A
Kaiser Family Foundation poll found that one-third of those who knew about the
drug benefit had an unfavorable impression.
Critics of the Medicare law, including the Alliance for Retired Americans,
argued it was a billion-dollar giveaway to corporate interests. Wary of
criticism, Medicare officials are insisting insurers include a generous variety
of drugs though health plans warn it will drive up costs for premiums, reports
The New York Times.
Insurance companies will begin marketing their drug plans to Medicare
recipients in the fall. Download an at-a-glance overview of Medicare's drug
benefit by visiting the Alliance's website at
www.retiredamericans.org/medicare.
Prescription Drug Spending Continues to Soar
Increased spending on prescription drugs continued to outpace overall health
care spending in a study of the world's industrialized nations. According to the
Organization for Economic Cooperation and Development (OECD), the United States
leads the 30 industrialized nations in highest drug expenses per capita. In
international comparisons, the United States fared far worse in growth in
spending on drugs versus overall health care spending from 1998-2003. The OECD
found a high differential between growth in drug spending and growth in overall
health care expenses in the U.S.
House Committee to Consider Pension Legislation
A House Education and Workforce Subcommittee will begin consideration next week
of H.R. 2830, pension legislation introduced by Committee chair Rep. John
Boehner (R-OH). The Alliance is very concerned about several provisions of the
bill including the loss of shutdown benefits when there is a plant closing, the
calculations use to determine a plan's solvency, and the ability of companies to
use investment advisers who may have conflicts of interest in giving advice to
retirees and workers. The full Committee is expected to pass the bill by the
July 4 recess. Ways and Means Chairman Bill Thomas (R-CA) has said he intends
to use this bill as the vehicle for Social Security privatization once it
emerges from the Education and Workforce Committee.
Automatic Enrollment in 401(k) Plans Increases
As companies move from traditional pensions to 401(k) retirement plans that
shift the responsibility of retirement from employer to employee, a growing
number of companies are automatically enrolling workers in 401(k) retirement
plans, according to a study by Hewitt Associates Inc. Currently 40% of Americans
participate in a 401(k) plan or IRA. More than half of those people have less
than $15,000 saved. The study of 460 large companies found that 19% of companies
automatically enroll new workers in retirement plans.
House Ways and Means Chair Bill Thomas (R-CA) who is working on a broad
legislative package to address retirement issues and pick off Democratic support
is said to be considering a provision that would mandate automatic enrollment in
401(k) plans.
Alliance's Educational Fund Reports on Rx Help for
Medicare's Low-Income
The Alliance for Retired Americans Educational Fund (ARAEF) has released an
issue brief with information on how eligible low-income Medicare beneficiaries
can get extra help paying for their prescription drugs. Medicare Prescription
Drug Benefit: Navigating Low-Income Assistance is available on the Educational
Fund website at:
http://www.retiredamericansfund.org/pubs.
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Come to Washington, DC September 7-9 and Lobby Congress at the Alliance
for Retired Americans Legislative Conference - Register at
www.retiredamericans.org/legconf or call Joni Jones at
1-888-373-6497
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