Congressional Republicans Agree To Launch Social Security Campaign
Congressional Republicans Agree To Launch Social Security Campaign
By Mike AllenWashington Post Staff WriterMonday, January 31, 2005; Page A04
WHITE SULPHUR SPRINGS, W.Va. -- Congressional Republicans, after three months of internal debate, this weekend launched a months-long campaign to try to convince constituents that rewriting the Social Security law would be cheaper and less risky than leaving it alone, as the White House opened a campaign to pressure several Senate Democrats to support the changes.
The Republicans left an annual retreat in the Allegheny Mountains with a 104-page playbook titled "Saving Social Security," a deliberate echo of the language President Bill Clinton used to argue that the retirement system's trust fund should be built up in anticipation of the baby boomers' retirement.
The congressional Republicans' confidential plan was developed with the advice of pollsters, marketing experts and communication consultants, and was provided to The Washington Post by a Republican official. The blueprint urges lawmakers to promote the "personalization" of Social Security, suggesting ownership and control, rather than "privatization," which "connotes the total corporate takeover of Social Security." Democratic strategists said they intend to continue fighting the Republican plan by branding it privatization, and assert that depiction is already set in people's minds.
House Minority Leader Nancy Pelosi (D-Calif.) plans to say Monday in a "prebuttal" to President Bush's State of the Union address that her party will not "let a guaranteed benefit become a guaranteed gamble."
The Republican's book, with a golden nest egg on the cover, urges the GOP to "talk in simple language," "keep the numbers small," "avoid percentages; your audience will try to calculate them in their head" and "acknowledge risks," because listeners "know they can lose their investments."
Party leaders said the gathering marked a change from debating how gingerly to take on Social Security, to beginning to work aggressively on doing it while trying to minimize the political risk.
Although reservations remain among lawmakers who might be vulnerable to a Democratic challenge, the White House and congressional Republicans tried to reassure critics by refining the substance and packaging of the ideas. Karl Rove, the White House senior adviser, told the group that Bush's proposal for the accounts, which would allow younger workers to put some of their payroll taxes into stocks and bonds, would be conservatively structured to give people only a few choices, similar to a federal plan to which many lawmakers belong.
Bush, who rarely mentions his daughters in public, referred to the twins during a passionate, closed-door question period Friday in which he contended that today's workers will be disappointed when they retire if nothing is done.
Rep. Roy Blunt (R-Mo.), who as majority whip is the House's chief vote counter, said that during the retreat, members went "from being cautious to being cautiously optimistic" about passing Social Security legislation this year. He acknowledged that in taking on an issue that has been a strength of Democrats for generations, the GOP is "way out there beyond our defenses."
"We realize that almost everything has to go right to get this done," Blunt said. "This is such a hard thing to do that it wouldn't take much for us to not be able to do it. We absolutely couldn't even consider it if we didn't have the president's total commitment to do everything he can do to lead this debate."
Lawmakers said a turning point came Friday when House Majority Leader Tom DeLay (R-Tex.), who has been leery of taking on Social Security, argued that the caucus had a "moral obligation" to do so.
During the three-day gathering at the Greenbrier resort, Republicans resolved to devote hundreds of town meetings and PowerPoint presentations to Social Security in their states and districts.
Bush will kick off the offensive by using his State of the Union address on Wednesday to build a sense of urgency, then will embark on a flurry of travel that begins with trips on Thursday and Friday to the home states of six senators that Republican strategists have targeted as possible supporters of a Social Security overhaul. The president carried all five states in 2004.
The senators are Bill Nelson (Fla.), Ben Nelson (Neb.) and Kent Conrad (N.D.), who are all up for reelection; Max Baucus (Mont.), the top Democrat on the Finance Committee, who supported Bush's 2001 tax cut, along with Ben Nelson; and Blanche Lincoln (Ark.) and Mark Pryor (Ark.), potential swing votes. Lincoln supported Bush's first tax cut.
http://www.washingtonpost.com/wp-dyn/articles/A49938-2005Jan30.html?nav=hcmodule
Saving Social SecurityA Balanced ApproachPeter A. Diamond and Peter R. OrszagBrookings Institution Press 2003 c. 230pp. Cloth Text, 0-8157-1838-1, $32.95
http://www.brook.edu/press/books/savingsocialsecurity.htm
January 31, 2005
Employers Can Get Medicare Subsidies for Lower BenefitsBy ROBERT PEAR
ASHINGTON, Jan. 30 - The Bush administration has touched off a furious debate with new rules allowing employers to collect billions of dollars in federal subsidies for prescription drug benefits less generous than what many retirees were expecting under the new Medicare law.
In theory, those retiree benefits should be at least equal in value to the new Medicare drug benefit. But that will not always be the case, according to Medicare officials, labor unions and specialists in employee benefits.
In comparing retiree benefits with Medicare, the administration said, many employers will be able to ignore Medicare's catastrophic coverage, which helps people with high drug costs and accounts for about one-fourth of the annual value of the standard Medicare drug benefit, $300 out of $1,220.
Final rules for the new program were published Friday in the Federal Register. The new drug benefit becomes available next January.
In issuing the rules, Dr. Mark B. McClellan, administrator of the Centers for Medicare and Medicaid Services, said the federal subsidies would reverse the erosion of retiree health benefits and enable employers to "offer high-quality retiree coverage at a much lower cost." To qualify, Dr. McClellan said, employers must provide coverage "as good as or better than" the standard Medicare drug benefit.
But JoAnn C. Volk, a health policy analyst at the A.F.L.-C.I.O., said, "The rules allow an employer to get the subsidy for a benefit that is less valuable to retirees than what they would receive if they signed up for the Medicare drug benefit and the employer dropped coverage altogether."
Retirees can sign up for Medicare drug coverage if they think it is better than an employer's plan. Employers get no subsidy for such retirees. But it may be difficult for beneficiaries to compare the options available to them, which are likely to have different premiums and co-payments and to cover different medicines.
In the final rules, the administration said it had tried to balance two "potentially competing objectives": maximizing the number of employers who qualify for subsidies and "providing greater protection to beneficiaries."
The new Medicare drug benefit represents the largest expansion of Medicare since the program was created in 1965. Employers are now the largest source of drug coverage for retirees, and Congress wanted to encourage them to continue providing drug benefits, in part because their contributions save money for Medicare.
Accordingly, Congress authorized subsidies for employers who provide a retiree drug benefit at least as generous as Medicare's.
But the value of the standard Medicare benefit, especially the catastrophic coverage, for people with very high drug costs and multiple chronic conditions, is subject to different interpretation.
The Congressional Budget Office estimates that Medicare will spend $71 billion on employer subsidies from 2006 to 2013. The maximum subsidy in 2006 will be $1,330 per retiree. Medicare officials say the average subsidy payment will be $668 per retiree.
The future of retiree health benefits is a huge issue. For more than a decade, employers have been cutting retiree health benefits. Since Medicare already covers doctors' services and hospital care, prescription drugs account for a sizable share of the current cost of retiree health plans, 40 percent to 60 percent, by some estimates.
Congress hoped the new subsidies would give employers an incentive to continue providing retiree drug benefits. Two recent surveys found that many employers intended to do so, at least in 2006.
Also at issue are the standards for use of subsidies and the pivotal role that actuaries will play.
Congress defined the standard Medicare drug benefit. But not wanting to dictate the details, lawmakers will let employers and insurers offer different benefits if an actuary certifies that their value is at least equal to that of the standard coverage.
Under the law, Medicare officials said, they have broad discretion to specify how the value of drug benefits will be measured. Medicare is defining "equivalence" in a way that differs from what many retirees had expected, based on a layman's understanding of the term. Dr. McClellan said that in many cases it would not be a close call, because employers had better drug benefits than Medicare, and in any event, he added, retirees would be better off because the subsidies would enable employers to continue providing coverage.
The Congressional Budget Office estimates that the average cost of providing the Medicare drug benefit will be $1,640 for each person who signs up in 2006. Beneficiaries will pay about one-fourth of the cost in premiums, expected to average $35 a month or $420 a year, and the government will pay the remainder, $1,220.
Kathryn L. Bakich, vice president of the Segal Company, an employee benefits consulting firm, said, "The government share of the Medicare drug benefit is approximately $1,200 a year, but under the new rules, some employers can qualify for the subsidy if they provide a retiree drug benefit worth $900 to $1,000."
About 11.4 million retirees have drug coverage from former employers. In issuing rules for the new subsidy, administration officials said, they wanted to encourage employers to continue providing coverage without allowing them to obtain a windfall at taxpayers' expense.
Under the rules, employers cannot shift all costs to retirees. But Ms. Volk said employers could reduce retiree coverage so it would, in some cases, be less attractive than the Medicare benefit.
Paul W. Dennett, vice president of the American Benefits Council, a trade group for large employers, said the rules gave employers what they wanted: "a lot of flexibility in structuring retiree health benefits." As a result, Mr. Dennett said, "companies will be more likely to continue providing coverage."
Under the new law, the federal government will pay a tax-free subsidy to employers who provide retirees with drug benefits that meet federal standards. The subsidy payable to an employer will be 28 percent of a retiree's drug costs from $250 to $5,000 in 2006.
To qualify for the subsidy, an employer must meet two criteria: the overall value of its retiree drug coverage - the expected amount of claims paid - must be at least equal to that of the standard Medicare drug coverage. In addition, the net value of retiree drug coverage, after subtracting premiums, must equal or exceed the net value of the standard Medicare drug benefit.
In making these calculations, the government said, many employers can "disregard the value of catastrophic coverage" that will be provided by Medicare.
The catastrophic coverage kicks in after beneficiaries have spent $3,600 of their own money. Costs covered by a former employer do not count toward that limit. Under the rules, many employers can assume that retirees have supplemental coverage. Such coverage lowers out-of-pocket costs, reducing the retirees' reliance on Medicare.
If, for example, an employer had a $3,000 limit on out-of-pocket costs, retirees would not have to use Medicare's catastrophic coverage, so the Medicare benefit would be worth less to them.
The administration said this "innovative approach" to analyzing the value of the standard Medicare drug benefit was recommended by several business groups that commented on an earlier version of the rules. The test adopted by the Bush administration is almost identical to one proposed by the American Benefits Council and the United States Chamber of Commerce.
Medicare officials, acknowledging that these calculations could be enormously complicated, said they would issue guidelines to help employers and actuaries understand the "actuarial equivalence test."
http://www.nytimes.com/2005/01/31/politics/31drug.html?th
By Mike AllenWashington Post Staff WriterMonday, January 31, 2005; Page A04
WHITE SULPHUR SPRINGS, W.Va. -- Congressional Republicans, after three months of internal debate, this weekend launched a months-long campaign to try to convince constituents that rewriting the Social Security law would be cheaper and less risky than leaving it alone, as the White House opened a campaign to pressure several Senate Democrats to support the changes.
The Republicans left an annual retreat in the Allegheny Mountains with a 104-page playbook titled "Saving Social Security," a deliberate echo of the language President Bill Clinton used to argue that the retirement system's trust fund should be built up in anticipation of the baby boomers' retirement.
The congressional Republicans' confidential plan was developed with the advice of pollsters, marketing experts and communication consultants, and was provided to The Washington Post by a Republican official. The blueprint urges lawmakers to promote the "personalization" of Social Security, suggesting ownership and control, rather than "privatization," which "connotes the total corporate takeover of Social Security." Democratic strategists said they intend to continue fighting the Republican plan by branding it privatization, and assert that depiction is already set in people's minds.
House Minority Leader Nancy Pelosi (D-Calif.) plans to say Monday in a "prebuttal" to President Bush's State of the Union address that her party will not "let a guaranteed benefit become a guaranteed gamble."
The Republican's book, with a golden nest egg on the cover, urges the GOP to "talk in simple language," "keep the numbers small," "avoid percentages; your audience will try to calculate them in their head" and "acknowledge risks," because listeners "know they can lose their investments."
Party leaders said the gathering marked a change from debating how gingerly to take on Social Security, to beginning to work aggressively on doing it while trying to minimize the political risk.
Although reservations remain among lawmakers who might be vulnerable to a Democratic challenge, the White House and congressional Republicans tried to reassure critics by refining the substance and packaging of the ideas. Karl Rove, the White House senior adviser, told the group that Bush's proposal for the accounts, which would allow younger workers to put some of their payroll taxes into stocks and bonds, would be conservatively structured to give people only a few choices, similar to a federal plan to which many lawmakers belong.
Bush, who rarely mentions his daughters in public, referred to the twins during a passionate, closed-door question period Friday in which he contended that today's workers will be disappointed when they retire if nothing is done.
Rep. Roy Blunt (R-Mo.), who as majority whip is the House's chief vote counter, said that during the retreat, members went "from being cautious to being cautiously optimistic" about passing Social Security legislation this year. He acknowledged that in taking on an issue that has been a strength of Democrats for generations, the GOP is "way out there beyond our defenses."
"We realize that almost everything has to go right to get this done," Blunt said. "This is such a hard thing to do that it wouldn't take much for us to not be able to do it. We absolutely couldn't even consider it if we didn't have the president's total commitment to do everything he can do to lead this debate."
Lawmakers said a turning point came Friday when House Majority Leader Tom DeLay (R-Tex.), who has been leery of taking on Social Security, argued that the caucus had a "moral obligation" to do so.
During the three-day gathering at the Greenbrier resort, Republicans resolved to devote hundreds of town meetings and PowerPoint presentations to Social Security in their states and districts.
Bush will kick off the offensive by using his State of the Union address on Wednesday to build a sense of urgency, then will embark on a flurry of travel that begins with trips on Thursday and Friday to the home states of six senators that Republican strategists have targeted as possible supporters of a Social Security overhaul. The president carried all five states in 2004.
The senators are Bill Nelson (Fla.), Ben Nelson (Neb.) and Kent Conrad (N.D.), who are all up for reelection; Max Baucus (Mont.), the top Democrat on the Finance Committee, who supported Bush's 2001 tax cut, along with Ben Nelson; and Blanche Lincoln (Ark.) and Mark Pryor (Ark.), potential swing votes. Lincoln supported Bush's first tax cut.
http://www.washingtonpost.com/wp-dyn/articles/A49938-2005Jan30.html?nav=hcmodule
Saving Social SecurityA Balanced ApproachPeter A. Diamond and Peter R. OrszagBrookings Institution Press 2003 c. 230pp. Cloth Text, 0-8157-1838-1, $32.95
http://www.brook.edu/press/books/savingsocialsecurity.htm
January 31, 2005
Employers Can Get Medicare Subsidies for Lower BenefitsBy ROBERT PEAR
ASHINGTON, Jan. 30 - The Bush administration has touched off a furious debate with new rules allowing employers to collect billions of dollars in federal subsidies for prescription drug benefits less generous than what many retirees were expecting under the new Medicare law.
In theory, those retiree benefits should be at least equal in value to the new Medicare drug benefit. But that will not always be the case, according to Medicare officials, labor unions and specialists in employee benefits.
In comparing retiree benefits with Medicare, the administration said, many employers will be able to ignore Medicare's catastrophic coverage, which helps people with high drug costs and accounts for about one-fourth of the annual value of the standard Medicare drug benefit, $300 out of $1,220.
Final rules for the new program were published Friday in the Federal Register. The new drug benefit becomes available next January.
In issuing the rules, Dr. Mark B. McClellan, administrator of the Centers for Medicare and Medicaid Services, said the federal subsidies would reverse the erosion of retiree health benefits and enable employers to "offer high-quality retiree coverage at a much lower cost." To qualify, Dr. McClellan said, employers must provide coverage "as good as or better than" the standard Medicare drug benefit.
But JoAnn C. Volk, a health policy analyst at the A.F.L.-C.I.O., said, "The rules allow an employer to get the subsidy for a benefit that is less valuable to retirees than what they would receive if they signed up for the Medicare drug benefit and the employer dropped coverage altogether."
Retirees can sign up for Medicare drug coverage if they think it is better than an employer's plan. Employers get no subsidy for such retirees. But it may be difficult for beneficiaries to compare the options available to them, which are likely to have different premiums and co-payments and to cover different medicines.
In the final rules, the administration said it had tried to balance two "potentially competing objectives": maximizing the number of employers who qualify for subsidies and "providing greater protection to beneficiaries."
The new Medicare drug benefit represents the largest expansion of Medicare since the program was created in 1965. Employers are now the largest source of drug coverage for retirees, and Congress wanted to encourage them to continue providing drug benefits, in part because their contributions save money for Medicare.
Accordingly, Congress authorized subsidies for employers who provide a retiree drug benefit at least as generous as Medicare's.
But the value of the standard Medicare benefit, especially the catastrophic coverage, for people with very high drug costs and multiple chronic conditions, is subject to different interpretation.
The Congressional Budget Office estimates that Medicare will spend $71 billion on employer subsidies from 2006 to 2013. The maximum subsidy in 2006 will be $1,330 per retiree. Medicare officials say the average subsidy payment will be $668 per retiree.
The future of retiree health benefits is a huge issue. For more than a decade, employers have been cutting retiree health benefits. Since Medicare already covers doctors' services and hospital care, prescription drugs account for a sizable share of the current cost of retiree health plans, 40 percent to 60 percent, by some estimates.
Congress hoped the new subsidies would give employers an incentive to continue providing retiree drug benefits. Two recent surveys found that many employers intended to do so, at least in 2006.
Also at issue are the standards for use of subsidies and the pivotal role that actuaries will play.
Congress defined the standard Medicare drug benefit. But not wanting to dictate the details, lawmakers will let employers and insurers offer different benefits if an actuary certifies that their value is at least equal to that of the standard coverage.
Under the law, Medicare officials said, they have broad discretion to specify how the value of drug benefits will be measured. Medicare is defining "equivalence" in a way that differs from what many retirees had expected, based on a layman's understanding of the term. Dr. McClellan said that in many cases it would not be a close call, because employers had better drug benefits than Medicare, and in any event, he added, retirees would be better off because the subsidies would enable employers to continue providing coverage.
The Congressional Budget Office estimates that the average cost of providing the Medicare drug benefit will be $1,640 for each person who signs up in 2006. Beneficiaries will pay about one-fourth of the cost in premiums, expected to average $35 a month or $420 a year, and the government will pay the remainder, $1,220.
Kathryn L. Bakich, vice president of the Segal Company, an employee benefits consulting firm, said, "The government share of the Medicare drug benefit is approximately $1,200 a year, but under the new rules, some employers can qualify for the subsidy if they provide a retiree drug benefit worth $900 to $1,000."
About 11.4 million retirees have drug coverage from former employers. In issuing rules for the new subsidy, administration officials said, they wanted to encourage employers to continue providing coverage without allowing them to obtain a windfall at taxpayers' expense.
Under the rules, employers cannot shift all costs to retirees. But Ms. Volk said employers could reduce retiree coverage so it would, in some cases, be less attractive than the Medicare benefit.
Paul W. Dennett, vice president of the American Benefits Council, a trade group for large employers, said the rules gave employers what they wanted: "a lot of flexibility in structuring retiree health benefits." As a result, Mr. Dennett said, "companies will be more likely to continue providing coverage."
Under the new law, the federal government will pay a tax-free subsidy to employers who provide retirees with drug benefits that meet federal standards. The subsidy payable to an employer will be 28 percent of a retiree's drug costs from $250 to $5,000 in 2006.
To qualify for the subsidy, an employer must meet two criteria: the overall value of its retiree drug coverage - the expected amount of claims paid - must be at least equal to that of the standard Medicare drug coverage. In addition, the net value of retiree drug coverage, after subtracting premiums, must equal or exceed the net value of the standard Medicare drug benefit.
In making these calculations, the government said, many employers can "disregard the value of catastrophic coverage" that will be provided by Medicare.
The catastrophic coverage kicks in after beneficiaries have spent $3,600 of their own money. Costs covered by a former employer do not count toward that limit. Under the rules, many employers can assume that retirees have supplemental coverage. Such coverage lowers out-of-pocket costs, reducing the retirees' reliance on Medicare.
If, for example, an employer had a $3,000 limit on out-of-pocket costs, retirees would not have to use Medicare's catastrophic coverage, so the Medicare benefit would be worth less to them.
The administration said this "innovative approach" to analyzing the value of the standard Medicare drug benefit was recommended by several business groups that commented on an earlier version of the rules. The test adopted by the Bush administration is almost identical to one proposed by the American Benefits Council and the United States Chamber of Commerce.
Medicare officials, acknowledging that these calculations could be enormously complicated, said they would issue guidelines to help employers and actuaries understand the "actuarial equivalence test."
http://www.nytimes.com/2005/01/31/politics/31drug.html?th
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