President Trump’s proposed 2021 budget claims to help the “most vulnerable populations,” including seniors. But vulnerable older Americans are among those who would be most hurt if this draconian budget were ever enacted.
The budget would slash Medicaid and non-defense discretionary spending, eliminating or drastically shrinking programs targeted at low-income people, including programs benefiting seniors, such as the Low Income Home Energy Assistance Program. At first glance, the administration appears to spare middle-class seniors, a group with high voter turnout that tends to support the president and his party. Despite the president’s hints that Social Security and Medicare will be on the chopping block after the election, the budget would spare retirement benefits (except those for federal employees) and claims to achieve Medicare savings only by eliminating “excessive spending and distortionary payment incentives” while “preserv[ing] benefits and access to care.”
Some Medicare provisions in the president’s budget, such as site-neutral payments across different types of facilities, address genuine problems in how Medicare is administered. But the nearly half trillion in proposed savings from Medicare over 10 years includes provisions that would indirectly affect Medicare beneficiaries’ access to care, such as reducing payments to partially cover unpaid medical bills for Medicare beneficiaries. Since unlimited out-of-pocket expenses are a major cause of bankruptcy for older Americans in poor health, reducing these reimbursements would cause some providers to avoid treating Medicare patients who have expensive conditions and limited resources—and would surely lead to hospital and clinic closures in underserved areas. Middle-class seniors and providers who treat them wouldn’t be spared, since lower-middle-class seniors ineligible for Medicaid are those most likely to spend a high share of their income on health care. The problem of uncompensated care would be compounded by the administration’s attempts to roll back Medicaid expansion under the Affordable Care Act (ACA), which has helped hospitals treating low-income and uninsured patients in expansion states.
In general, older Americans in poor health would be disproportionately affected by the president’s plan to cut a whopping $1 trillion in funding for Medicaid and the Affordable Care Act over 10 years. Though much of the supposed health cost savings in the president’s budget is attributed to vague “reforms” that would supposedly save money without affecting beneficiaries, the administration’s parallel efforts to repeal the ACA through the courts would inevitably leave millions of Americans without insurance and others facing higher costs, especially people with preexisting conditions. Repealing the ACA would also reopen the Medicare Part D “doughnut hole,” hurting seniors with high prescription drug costs.
Additional cost savings in the proposed budget come from unspecified “reforms” to Social Security Disability Insurance (SSDI) that would supposedly reduce disability rolls by 5%. Administrative cuts (including field office closings), reduced awareness of available benefits, and pressure on “outlier” administrative law judges to deny benefits have already contributed to a decline in the number of people accessing these benefits.
Such “magic asterisk” cuts to popular social insurance programs, along with rosy economic projections, are an attempt by the administration to be seen closing the giant hole in the budget caused by the president’s tax cuts. Alongside these vague promises, however, are punitive provisions, such as promoting Medicaid work requirements, that provide comparatively little savings but serve to shift attention from tax cuts favoring the wealthy to supposedly wasteful programs helping the poor. The evidence clearly shows, however, that work requirements predominantly create administrative barriers to coverage for people who should be exempt or are actually working.
Another gratuitous swipe at low-income Americans encourages states to increase Medicaid co-pays for some emergency department visits, based on the rationale that “Medicaid beneficiaries use the emergency department at an almost two-fold higher rate than the privately insured.” Though intended to conjure up an image of people abusing the system, the source for this statistic—a memo from the former deputy administrator of the Centers for Medicare and Medicaid Services—goes on to say that this is not due to widespread inappropriate use of emergency services among Medicaid beneficiaries, who tend to be in poorer health than the privately insured population. Instead, this is due to unmet health needs and a lack of access to alternative facilities (in Washington, D.C., for example, most urgent care clinics are located in higher-income neighborhoods). So to the extent that these higher co-pays would provide any budget savings, this would be at the expense of low-income beneficiaries forced to determine in advance whether their asthma attack or flu symptoms qualify as an emergency or risk a penalty for showing up at the ER.
Most seniors over 65 will not be directly affected by the proposed SSDI and Medicaid cuts because disabled beneficiaries transition to Social Security retirement benefits at age 66, and the president’s budget doesn’t propose cutting Medicaid payments for nursing home and other long-term care coverage. But the cuts would impoverish many older Americans before they reach age 65 because people are more likely to develop expensive and disabling medical conditions as they age. The same is true of Medicaid work requirements, since older workers—many in poor health—are disproportionately found among the long-term unemployed.
It’s human nature for people in good health with good jobs to assume that fortune will continue to smile upon them. But life often offers a corrective, and the administration may have overestimated the public’s—including seniors’—willingness to accept a budget that kicks people when they’re down.
Note: An earlier version of this blog post incorrectly stated that “an eight-day stay in intensive care would be a precondition for long-term care hospital services (the current standard is three days).” The proposed change, however, wouldn’t prevent Medicare beneficiaries from being admitted to long-term care hospitals, but would simply lower the payment rate. Though lower payment rates can indirectly affect access to care, this is not a direct benefit cut.