AARP: 'Fiscal cliff" fallout may harm Big Island seniors


By HUNTER BISHOP

Tribune-Herald staff writer

What’s the “fiscal cliff” debate in Washington mean for Hawaii?

With nearly 178,000 seniors 65 and older each getting an average of $13,000 a year in Social Security benefits, and with 188,840 aged patients enrolled in Medicare, it could mean a lot for Hawaii.

Republicans and Democrats in Washington are wrangling over legislation scheduled to take effect Jan. 1 that economists predict could send the nation into economic recession if Congress doesn’t reach agreement on an alternative plan.

Most Republicans want no new taxes on the rich, but may agree to them in return for spending cuts and “entitlement reforms,” meaning cuts in Medicare and Social Security programs.

Changing the cost-of-living calculations for Social Security beneficiaries, which is being discussed in the Washington budget talks, will “take $480 million out of the pockets of beneficiaries in Hawaii over the next 10 years,” according to the Hawaii office of AARP, an advocacy group for people over 50.

And raising Medicare coverage eligibility age from 65 to 67, also part of the nation’s contentious “fiscal cliff” talks, would leave 26,893 seniors without health care coverage in Hawaii, forcing them into the private insurance market and adding about $2,200 a year to their out-of-pocket insurance costs, said the AARP.

If no deal is struck to eliminate the spending cuts and tax increases in the plan set to take effect Jan. 1, Medicare programs nationwide stand to lose $11 billion in reimbursements to medical providers, especially physicians and hospitals, but the cuts would not affect seniors’ benefits. Yet, avoiding the fiscal cliff could result in cuts of $600 billion to Medicare nationwide in a compromise agreement.

The AARP is urging Congress to leave Medicare and Social Security out of the debate over the budget altogether. A “shortsighted” budget compromise would impact the health and retirement security of families throughout the nation, said Barbara Kim Stanton, Hawaii state director of AARP.

“Assuming that most people receiving Social Security, who are already just getting by, will simply ‘trade down’ in their spending on prescription drugs, utilities and other fixed expenses for lower cost operations is out of touch with reality,” Stanton said.

Medicare spent an estimated $1.76 billion on health care services in Hawaii in 2011, while Social Security pumped about $3.1 billion into the local economy through its Hawaii beneficiaries, nearly 178,000 of which are 65 and older. About 188,000 Hawaii residents receive Medicare benefits, and most also spend 15 percent, or about $4,600, on out-of-pocket medical expenses.

“Raising the (Medicare) eligibility age would dramatically increase costs for recently retired and soon-to-retire seniors, drive up premiums for those enrolled in Medicare, and increase overall health care costs,” Stanton said.

Changes to the cost-of-living increases in Social Security payments would result in loss of “roughly $480 million” to beneficiaries in Hawaii over the next 10 years, Stanton added.

The non-profit AARP lobbies on behalf of 37 million members age 50 and older. Hawaii County has about 26,000 members.

Ironically, if no deal is reached and the nation topples over the fiscal cliff, Social Security and Medicare recipients would maintain current benefits — at least for a while.

“I don’t think anybody wants to tempt the edge of the fiscal cliff,” said Bruce Bottorff, state associate director for the AARP. “Our way of life here in Hawaii could be threatened … there is a larger impact.

“We’re not thinking short term,” said Bottorff. “These programs are fundamental for our health and financial security. We should be looking at strengthening them.”

Nearly 15 percent of the Hawaii County’s residents are over 65, and 14.5 percent fall below the poverty line, so the impacts of “entitlement” cuts will likely have greater impact here, said Bob Masuda, a Waimea resident and member of AARP’s state executive board.

“I can agree that $27 a month lost in Social Security may not sound like much, but to a low-income senior, that may mean a couple bags of rice, several meals,” Masuda said. “It’s that kind of thing we’re most concerned about. Our island’s median income is on the bottom, in all these categories, we’re economically the most challenged.” Even if the talks fall over the fiscal cliff, “they’ll get hammered in other ways,” he said.

What can anyone do? “The first thing is to be aware of the budget discussions, ” said Bottorff, “These decisions will affect everyone. Two, reach out to your Congressional representatives to impress on them how important these programs are in our personal lives. We’re fortunate our delegation is supportive,” he said, “but they are under intense pressure to compromise.”

Masuda said that Social Security and Medicare payments are so small already, the debate is “almost like a farce. They shouldn’t even be included in this discussion.”

“We need responsible solutions, not a last-minute budget deal. I hope in spite of the challenges, our leaders don’t have to dig too deep to find a sense of responsibility and integrity to do the right thing for all our citizens.”

 

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