Nonprofit, nonpartisan journalism. Supported by readers.

Donate
Topics

Franken on fixing Social Security and Medicare — and why repealing Obamacare is a terrible idea

Sen. Al Franken says a projected seven additional years of solvency for Medicare are a result of revenues and savings directly caused by Obamacare.

Sen. Al Franken talking to reporters at Minnesota Farmfest earlier this month.
REUTERS/Craig Lassig

This is one in an occasional series of articles about the policy positions of U.S. Senate candidates Mike McFadden and Al Franken.

On Friday, I resumed my self-appointed role as mediator of an issue-oriented back and forth between U.S. Sen. Al Franken and his Republican challenger Mike McFadden over their substantive positions, interviewing Franken about issues on which I recently reported McFadden’s positions.

On a previous round, McFadden had said that the failure of the federal government to address the projected long-term insolvency of Social Security and Medicare was a “moral issue” for him and that he favored an everything-on-the-table negotiation across parties and branches for a long-term fix that would put the two big senior entitlement programs on a sustainable basis.

Of the various ideas that are generally discussed for extending the projected ability of those programs to pay all promised benefits, McFadden was willing to specify only one that he favored — raising the age at which seniors qualify for Medicare higher than the current age of 65.

Article continues after advertisement

McFadden also favors an everything-on-the-table approach to aligning the long-term projected costs and revenue of Social Security, but didn’t endorse any specific measures but did want to rule out one thing, which is anything that would affect the currently scheduled benefits of anyone already at or near retirement.

So I asked Franken to address those entitlement questions.

Social Security

On Social Security, Franken had one proposal for extending the projected solvency of the program. (The latest projection of the Social Security trustees is that the program will be unable to pay full-benefits after 2033.) He favors raising the cap on wages to which Social Security taxes apply. The FICA tax currently applies to the first $117,000 of wage income an individual earns per year.

“I basically want a fairer system,” Franken said. Right now, if you earn $30,ooo or $50,000 or $117,000, you you pay FICA taxes on every bit of your income, but if you earn $1 million, you pay FICA on just 11.7 percent of your income. If you make $10 million, you pay on just the first 1.17 percent of your income, he said.

Franken didn’t make a fully developed proposal. He specified that he wasn’t talking about completely removing the cap, and he could imagine a provision that would apply something less than the full 6.2 percent tax that employees and employers each pay on wages up to the cap. But his basic idea was to get more revenue from the highest earners to extend the ability of Social Security to pay fully promised benefits.

The two ideas that Franken wanted to rule out from changes in Social Security are any effort to “privatize” the program and any effort to cut benefits. In the last category, he opposes the proposal, which President Obama has supported, of switching from the Consumer Price Index as a measure of inflation which is applied to the value of benefits over time to the so-called “chained CPI” which would cause benefits to grow more slowly. 

Medicare

The Medicare discussion was much more complicated. Franken started by mentioning that in the years since the passage of the Affordable Care Act (for which Franken voted soon after being sworn in in 2009), the Medicare trustees have actually extended the date for trust fund solvency by 11 years.

Franken says seven of those years of additional solvency are a result of new revenues and costs savings that were directly caused by the ACA. The additional four years of added Medicare projected solvency were caused by reforms and new efficiencies in the health-care delivery system that are related to but not directly the result of the ACA.

Article continues after advertisement

So (just me talking here) perhaps the points above has something to do with the fact that McFadden and others who would like to defeat Franken are fond of saying that he cast “the decisive vote” to pass the ACA, also known as Obamacare.

Franken took it one step further, pointing out that Obamacare included important new benefits for seniors on Medicare, specifically that it closed the “doughnut hole” in the Medicare Part D program (the effect of the closing is to save many seniors money on prescription drugs) and Obamacare also added new free preventive-care benefits for seniors.

I pointed out to Franken that I had asked about how to extend the future of Medicare solvency, and he was pointing mostly to changes that have already occurred.

He replied: “The worst thing you could do is repeal the Affordable Care Act. If you are concerned about the long-term solvency of Medicare, do not repeal the ACA” because the ACA has added years of solvency to Medicare and, presumably, if it was repealed as Republicans have tried to do, those added years of Medicare solvency would be taken away.

Again, just me talking here: Franken never brought up McFadden in the conversation except when I asked him to directly respond to something McFadden had said. But McFadden is in the “repeal-and-replace” camp on Obamacare. I have asked McFadden more than once which provisions of Obamacare he would like to preserve, and he has mentioned a few. But he hasn’t mentioned (nor did I ask him about any of them) the provisions that the trustees believe will extend the solvency of Medicare by seven years.

In addition, and much more simply, one measure that Franken favors to extend the solvency of Medicare would be to authorize Medicare to negotiate with the pharmaceutical industry over the price of drugs provided through Medicare Part D. They are currently banned from using Medicare’s bulk purchasing of medication to get lower prices. The idea is fiercely opposed by the pharmaceutical industry. Franken, who has sponsored bills to make such negotiations legal, estimates that the savings to the government would be about $240 billion over 10 years.

As I mentioned above, McFadden had told me that one way to save money in Medicare and extend its long-term solvency would be raise the age at which Medicare benefits begin. Life expectancy has grown substantially since Medicare began in 1965, McFadden said, and at some point the government will not be able to subsidize health care for a larger population over a longer period. I asked Franken to respond (which he managed to do without mentioning McFadden).

Franken called the idea a “non-starter and a “very bad idea.” You would take a group of 66- to 67-year olds, who are now the youngest (and therefore, on average, the healthiest) of the Medicare recipients, Franken said, and you would transfer them to the private insurance pool, where they would be the oldest and least healthy. It would drive up the cost of the private insurance pool and leave Medicare with an older, sicker population than it now covers.

“This has been scored,” Franken said said. “It would save Medicare money but it would cost our overall health-care system a tremendous amount of money. It’s also a bad idea because you meet so many people who are just hanging on,” by which I took him to mean 63- and 64-year-olds, who have health problems that they cannot afford to address, hanging on until their 65th birthday and the beginning of their Medicare coverage.

Article continues after advertisement

Before moving on from the issue of Medicare and health-care cost savings, I will just mention that I cannot, without turning this post into a small book, go into the other cost-saving measures — the ones that add the extra four years of solvency to Medicare, the ones that come mostly from the category called “delivery reform,” but Franken loves to talk about them and they sound pretty sensible and pretty cool to me. I hope they work.

In order to keep this post a reasonable length, I’ll save a couple of other Franken issue positions for another day.