Butterfield: GOP Medicare Cuts Would Cost Retirees $182,000


Washington, D.C. – Congressman G. K. Butterfield warns that under the House Republican’s plan to cut and privatize Medicare future retirees will need to save an additional $182,000 to cover their increased health care costs.

According to a detailed analysis by the Center for Economic and Policy Research (CEPR), it’s estimated that under the House Republican Medicare plan, individuals born in 1957 would need an additional $182,000 by the time they retire at 65 to pay the additional costs if they live to 84.

Butterfield said that this is particularly troubling because approximately half of all workers do not have any retirement savings at all. The Employee Benefits Research Institute estimates that the average retirement savings shortfall was more than $47,000 per individual in 2010.

“Unfortunately, people of modest means would have two choices when it comes to their health care: go deep in debt or go without,” Butterfield said. “Medicare is supposed to keep people from having to make those kinds of choices.”

Last month, House Republicans voted to end the Medicare program, which offers guaranteed benefits, and replace it with a plan that would force seniors to find private insurance with the assistance of a voucher. Since the voucher’s value relative to health care costs would decrease over time and private insurance costs are higher than traditional Medicare, seniors retiring in 2022 under the Republican plan would be forced to pay much higher costs than under current law.
An analysis by the non-partisan Congressional Budget Office (CBO) found that under the Republican Medicare proposal, beneficiaries would receive less care and pay more for it. Additionally, the total costs would be significantly higher using private plans than it would be using the traditional Medicare program. CBO found that Medicare provides health care for 11 percent less than the total costs through private insurers.

According to the CBO, if the new system were fully implemented, a typical 65-year-old senior would see their annual out-of-pocket costs rise to $12,500 – twice what it would be under the current system.

“Medicare beneficiaries with modest incomes, such as elderly widows who must live on $15,000 or $20,000 a year, would likely be hit hardest,” Butterfield said. “These Medicare vouchers would fall farther and farther behind health care costs — and purchase less and less coverage — with each passing year.”

Butterfield said that affluent Medicare beneficiaries would be able to respond to shrinking Medicare coverage by buying more supplemental coverage. However, seniors who could not afford to do so would simply get less health care, creating a two-tier health care system and would effectively result in more rationing on the basis of income.

“We need to strengthen Medicare, not destroy it,” Butterfield said. “Instead, Congress needs to work in a bipartisan manner to find solutions that have the support of both parties and the American people.”

Butterfield said the proposal would also go back on closing the Medicare Part D “donut hole.” Under the health care reforms, the donut hole would be completely closed by 2020. According to data from the Centers for Medicare and Medicaid Services, there are about 7,300 Medicare beneficiaries Butterfield’s district who would be affected. And, in all, Butterfield represents about 115,000 Medicare beneficiaries.

The CEPR study can be found at: http://www.cepr.net/documents/publications/ryan-waste-2011-04.pdf

The analysis of costs to future retirees can be found at: http://democrats.edworkforce.house.gov/documents/112/pdf/letters/CEPRLettertoMiller.pdf

The CBO study can be found at: http://www.cbo.gov/ftpdocs/119xx/doc11966/11-17-Rivlin-Ryan_Preliminary_Analysis.pdf