Protecting Senior Benefits Puts Medicaid at Risk

Low-income program faces cuts as major senior groups lobby to shield Social Security and Medicare.

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Medicaid cuts are reportedly under serious consideration to help reduce federal budget deficits and win enough Congressional support to raise the nation's debt ceiling. According to news accounts of negotiations with Congressional leaders being led by Vice President Joe Biden, cutting Medicaid healthcare benefits is considered more politically feasible than going after Social Security or Medicare.

The political equation is simple. A high percentage of older Americans turn out to vote, and the numbers of voters who receive Social Security and Medicare is soaring. By contrast, Medicaid recipients, who are poor and include many children, tend not to vote. Medicaid is also at risk because the state-federal funding rules for the program are contributing to big budget problems in statehouses throughout the country.

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Specific proposals to reduce the deficit are expected to be delivered to Congress before its July 4 holiday recess. An agreement to raise the debt ceiling is needed by early August to avoid possible defaults on federal securities.

Virtually all assessments of the nation's budget deficits have concluded that reductions in the major entitlement programs—Medicare, Medicaid, and Social Security—will be required to narrow and eventually eliminate deficits. To date, supporters of those programs have not acknowledged the need for such cuts.

AARP, the nation's most powerful seniors' organization, has urged its members to support a pledge drive to lobby Congress not to cut Social Security and Medicare. That effort does not mention Medicaid. AARP has begun a new television ad campaign, and released this script for its ad:

"If Congress really wants to balance the budget … they could stop spending our money on things like … a cotton institute in Brazil … poetry at zoos … treadmills for shrimp …

"But instead of cutting waste … Or closing tax loopholes … Next month, Congress could make a deal that cuts Medicare … even Social Security. I guess it's easier to cut the benefits we earned … than to cut pickle technology.

"Protect Medicare and Social Security. Join our fight."

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Beyond targeted cuts to the two programs, AARP also has expressed concern that Congress might adopt spending caps that could trigger across-the-board cuts to all programs. Because Medicare and Social Security are two of the largest sources of federal spending, they could be significantly affected under a spending-cap approach to curbing deficits.

"Instead of making harmful cuts to Social Security and Medicare, Congress should cut down on waste, fraud and inefficiency throughout the health care system and target other wasteful and inefficient spending," AARP says, "including spending through the tax code in the form of loopholes and other unnecessary subsidies."

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Another seniors' group, the National Committee to Preserve Social Security and Medicare, says it opposes cuts to Medicaid as well as any reductions in Social Security or Medicare benefits. It has also opposed any effort to continue this year's cut in Social Security payroll taxes. The employee's share of taxes was cut this year to 4.2 percent from 6.2 percent of pay, up to the program's annual wage ceiling of $106,800. Because of recent weakness in the economy, there is reportedly interest in continuing the cuts to 2012 and also trimming the employer's share of payments by two percentage points.

The government would use general revenues to repay Social Security for any tax cuts. But the organization said such reliance "would eventually have a devastating effect on Social Security," fundamentally changing its self-supporting funding approach and thus making it more susceptible to future program cuts.

Twitter: @PhilMoeller