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Trumpcare: An Indirect Cut To Social Security

Over 2.8 million Social Security beneficiaries are under the age of 65. Claiming benefits at the earliest possible age, 62, or not long after means that those beneficiaries will have smaller monthly Social Security benefits for the rest of their lives than people who have the luxury and resources to delay. But most have no other choice. Some may have lost their jobs and have no other income; others work in physically-demanding jobs and their bodies are worn out; still others must stop work to care for a sick spouse or parent. There’s a good reason that the most common age to claim Social Security’s earned benefits is age 62.

These “young” Social Security beneficiaries are in a particularly vulnerable position. In addition to having smaller monthly benefits, they aren’t yet eligible for Medicare. Because they have retired, they don’t have employer-based health insurance. So their only option is the individual insurance marketplace. But insurance corporations are not very interested in covering such an expensive (read: not profitable for them) population. Their solution? Charge customers in their sixties enormous premiums.

The Affordable Care Act (“ACA,” AKA Obamacare) took steps to help older Americans afford health insurance. The law limited how much insurance companies are allowed to charge older customers compared to their younger counterparts. It also created a system of income-based subsidies that significantly reduce the cost of insurance, which is particularly important for older and poorer Americans. Under the ACA, a 64-year-old with an annual income of $26,500 pays $1,700 in premiums each year.

The so-called “American Health Care Act” (AKA Trumpcare) would be a disaster for Social Security beneficiaries in their early sixties. It would repeal the ACA’s regulations on insurance companies, allowing them to charge older Americans up to five times as much as their younger counterparts for health insurance. The bill would also replace the ACA’s income-based subsidies with inadequate age-based stipends. That same 64-year-old making $26,000 who pays $1,700 in premiums under Obamacare would pay $14,600 under Trumpcare. That’s a 750 percent increase, and more than half her income!

Given that the average Social Security benefit for a 64-year-old retiree is only $12,920, there will likely be retirees for whom insurance premiums consume more than their entire Social Security benefit. Or in other words, an indirect cut of 100 percent! Trumpcare would force people who have worked and paid into Social Security for their entire lives to turn over their monthly checks to insurance companies. For the one-third of beneficiaries who rely on Social Security for all or nearly all of their income, that leaves nothing for food, housing, utilities, or the rest of life’s expenses.

And this is only for premiums. There is also the expense of co-pays, deductibles, medicine, hearing aids, and so much more. Most seniors are living close to poverty. Trumpcare likely will push many more below the poverty line. Families cannot spend half (or all!) of their incomes on health insurance. Instead, they will be forced to go without it. If they cannot go without it, they will go without food.

Social Security is designed to ensure that, after a lifetime of work, seniors should be able to retire with dignity and independence. Trumpcare would turn them into beggars.

And that’s not all. Trumpcare also massively cuts Medicaid, which seniors of all ages rely on for long-term care, as well as acute care. So it’s no surprise that the Congressional Budget Office estimates that 30 percent of low-income Americans aged 50-64 will be uninsured by 2026 if Trumpcare passes. Not only that, people who must go without coverage for 63 days or more — only slightly more than two months of unaffordable premiums — and then try to get covered again will be forced to pay thirty percent higher premiums for an entire year!

This is a true Catch-22. You can’t afford insurance, so you must pay almost a third more if you can finally scrape together enough to afford that coverage!

As it is, millions of Americans in their early sixties are barely hanging on until they’re eligible for Medicare. We should be lowering the Medicare eligibility age to 62 so that every Social Security beneficiary also receives Medicare, as a step towards making health care a right for everyone in this country. Instead, Trumpcare moves in exactly the wrong direction by massively increasing healthcare costs for an age group that is already struggling.

Unbelievably, the first incarnation of this horrific bill didn’t garner enough conservative support in the House because it isn’t stingy enough! Paul Ryan and his lieutenants have now made Trumpcare even worse to placate the so-called “Freedom Caucus.” The newest version of the bill would let states, rather than the federal government, determine which “essential health benefits” insurance plans are required to include. That means that if states decide to drop or change essential health benefits, insurance companies will be able to sell older Americans junk plans that don’t actually cover the care they need, including hospitalization, prescription drugs, and preventative care.

That means that a 63-year-old woman could scrape together her savings and much of her Social Security benefit to buy insurance, and then one day have a fall and end up in the hospital. Only when she receives an enormous bill for the hospital stay will she learn that the insurance she sacrificed so much to pay for was useless when she needed it. And, she will be reminded it of it thereafter as she is hounded and harassed by debt collectors, until, at last, she is driven into bankruptcy. This is no way to treat hardworking Americans who have spent a lifetime contributing to our nation.

When Members of Congress vote on this terrible bill, they would do well to remember another important characteristic of the 62-64 age group: They vote in huge numbers, and are an especially large share of the midterm electorate. Regardless of party affiliation, voters who have their insurance premiums raised by 750 percent will not be in a forgiving mood in 2018. Nor should they be. Trumpcare may be their ultimate death sentence.

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Nancy Altman

Nancy J. Altman has a forty year background in the areas of Social Security and private pensions. She is President of Social Security Works and Chair of the Strengthen Social Security coalition and campaign.
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