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The President's FY 2017 Budget and Its Effect on Seniors

On February 9, 2016, President Obama submitted his Fiscal Year (FY) 2017 budget to Congress. This paper summarizes some of the key proposals affecting seniors. 

Social Security

This year, like last year, the President’s budget proposes no changes in the way Social Security benefits are determined, which is good news for seniors.  Thanks to the tireless efforts of the National Committee and its members, the FY 2017 budget does not include any Social Security proposals that would negatively impact benefits for current or future beneficiaries.

The new budget proposes a substantial increase in the Social Security Administration’s (SSA) budget -- $13.067 billion for SSA’s FY 2017 appropriation for administrative funding.  This is a $905 million, or 7.44 percent, increase over the FY 2016 enacted level.  The new budget will enable SSA to improve customer service by hiring additional front-line employees for its teleservice centers and local offices as well as additional staff to reduce the backlog of disability applications that have accumulated in SSA’s hearing offices.  While the FY 2017 budget funds issuance of Social Security statements to 44 million individuals, the National Committee encourages the Acting Commissioner to develop plans to also send these important financial planning documents to the 120 million workers who will not receive a statement in 2017. 

Medicare

The National Committee opposes proposals in the President's budget which would shift additional costs to Medicare beneficiaries.  Over half of Medicare beneficiaries had incomes below $24,150 per year in 2014, and they are already paying 23 percent of their average Social Security check for Parts B and D cost-sharing in addition to paying for health services not covered by Medicare.  Medicare beneficiaries with annual incomes over $85,000 for individuals and $170,000 for couples are paying higher income-related premiums. 

We do not share the Administration's view that people will make wiser choices about using health care services if they have to pay more of the cost.  Rather, we agree with research that shows these additional costs could lead many seniors to forgo necessary care, which, in turn, could lead to more serious health conditions and higher costs.

The President’s budget contains proposals we oppose which would increase costs for future beneficiaries, including the following: 

1. Applies a $25 increase in the Part B deductible in 2020, 2022, and 2024 for new beneficiaries.  This increase would be in addition to the current Medicare Part B deductible that beneficiaries pay which, along with general revenues, funds Part B physician and outpatient services.  This proposal is estimated to cost beneficiaries $4.23 billion over 10 years.

2. Imposes a home health copayment for new beneficiaries beginning in 2020.  A $100 copayment per home health episode would be applicable for episodes with five or more visits not preceded by a hospital or other inpatient post-acute care stay. This proposal is estimated to cost beneficiaries approximately $1.30 billion over 10 years.

3. Expands income-related premiums under Medicare Parts B and D.  Beginning in 2020, the Administration proposes to restructure means-testing in Medicare Parts B and D by increasing the amount of income-related premiums, and maintaining the income thresholds associated with income-related premiums until 25 percent of beneficiaries under Parts B and D are subject to these premiums.  A Kaiser Family Foundation study found that this proposal would affect individuals with incomes equivalent to $45,600 for an individual and $91,300 for a couple in 2014.  This proposal is estimated to cost beneficiaries approximately $41.2 billion over 10 years.

The President's budget includes numerous proposals to strengthen Medicare's financing and improve the quality of care provided to beneficiaries.  We support many of these proposals, including:

  • Building on provisions in the Affordable Care Act (ACA) that will provide better care to Medicare beneficiaries and reform Medicare payments to physicians.
  • Supporting initiatives to prevent, detect and recover improper payments, including fraud, waste and abuse.
  • Allowing Medicare to receive the same rebates as Medicaid for brand name and generic drugs provided to beneficiaries who receive the Part D Low-Income Subsidy, beginning in 2018.
  • Increasing manufacturer discounts for brand name drugs in Medicare Part D to 75 percent, effectively closing the coverage gap “donut hole” for brand name drugs in 2018, two years sooner than under current law.
  • Promoting lower pharmaceutical costs by providing for faster development of generic versions of biologic drugs, and prohibiting "pay-for-delay" agreements between brand name and generic pharmaceutical companies that delay entry of generic drugs into the market.  
  • Allowing the Secretary of Health and Human Services (HHS) to negotiate with manufacturers to determine drug prices under Part D for biologics and high-cost drugs eligible for placement on a plan’s specialty tier, beginning in 2017.

Medicaid 

Medicaid pays for about 62 percent of all long-term services and supports for older adults and people with disabilities on Medicaid.  The National Committee supports proposals in the President’s budget that would expand long-term services and supports provided to beneficiaries in their homes and communities.  In addition, we support proposals that:

  • Offer further incentive for states to expand Medicaid by covering the full cost of expansion for the first three years regardless of when a State expands, ensuring equity between States that already expanded and those that will expand in the future. Previously, the ACA covered the full costs through calendar year 2016 before gradually reducing the level of support to 90 percent.

  • Implement simpler, faster processes for Federal-State review of marketing materials and beneficiary appeals for managed care plans that serve Medicare-Medicaid enrollees. Streamlining the appeals process will reduce confusion for beneficiaries and administrative burden for states and providers.

Administration for Community Living/Older Americans Act

The President's budget includes $2.076 billion for the Administration for Community Living (ACL), an increase of $28.4 million over the FY 2016 enacted amount.  The National Committee is pleased that the budget provides the following increases:

  • $849 million for Older Americans Act (OAA) nutrition services programs, a $14 million increase over 2016 funding, 
  • $358 million for OAA programs including supportive services such as in-home assistance with daily activities, transportation services and adult day care, a $10 million increase over 2016.

However, we are disappointed that most programs – including the Family Caregiver Support Program and the Senior Community Service Employment Program - are flat funded given the fact that OAA funding has not kept pace with inflation or our growing elderly population.

Alzheimer’s Disease Research

The President’s budget proposes to essentially flat fund Alzheimer’s disease and dementia research in FY 2017.  The Consolidated Appropriations Act, 2016, (P.L.114-113) provided $936 million in FY 2016 (a $350 million or 59.7% increase over FY 2015) for Alzheimer’s disease research at the National Institute on Aging.

While the FY 2016 appropriation significantly increased funding for this essential research, the National Committee is disappointed that the President’s FY 2017 budget did not recommend funding above the FY 2016 level.  Scientists have estimated that spending at least $2 billion a year on research is necessary to accomplish the national Alzheimer’s plan goal of preventing or effectively treating Alzheimer's disease by 2025.

  

Government Relations and Policy, February 2016


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