AARP official zeros in on Social Security, Medicare
By standard measurements, about 8 percent of Hawaii’s senior citizens live in poverty, but recent reviews of poverty rates, including new supplemental criteria, more than double that rate for Hawaii’s kupuna, a national AARP official said.
Under the new measurements, based on information the U.S. Census Bureau collected and the Kaiser Family Foundation analyzed earlier this year, 19 percent — one in five — Hawaii seniors live in poverty, AARP Senior Principal and Counsel Cheryl Matheis said during a visit to Kona this week.
“There are more people in Hawaii (in poverty) under that supplemental measurement than in most other states,” she said. “That was notable.”
Hawaii followed behind Washington, D.C., which had 26 percent of seniors living in poverty, and California, which had 20 percent of seniors fitting the new criteria, according to the Kaiser Family Foundation report. Among other statistics about senior citizens AARP tracks, Matheis noted that 87 percent of Hawaii’s residents received Social Security benefits, and a large portion of those recipients rely on the federal payment for 90 percent or more of their annual income.
Without Social Security, another 25 percent of Hawaii’s seniors would qualify for the more stringent poverty measurements, AARP statistics show.
All of those numbers come together to paint a picture of why Hawaii’s seniors, and the people who care for them, are likely tracking potential changes to Social Security.
Matheis said AARP is nonpartisan, in that it doesn’t endorse political candidates, but still takes positions on some political topics, including some of the recent, and likely to return, proposals regarding Social Security reform.
“It’s not logical to say we need to cut benefits to help younger Americans,” Matheis said. “We want people to look at options and make an informed choice about what we do (with Social Security).”
AARP isn’t opposed to looking at ways to change or improve Social Security, a nearly 80-year-old program which Matheis described as the most successful federal program. But officials would like to see discussions of program reform be separated from discussions about balanced budgets and deficit cutting.
Officials prior to the 2012 election approached two well known think tanks, one liberal, one conservative, and sought opinions on several proposed Social Security changes. Matheis said Social Security does face financial challenges, but they aren’t quite as dire as some pundits may portray.
“Social Security has enough money in its credit to pay full benefits until 2033,” she said. “After that it can pay 75 percent of benefits.”
Economists making those comments said the program can sustain the 75 percent benefit level for as far out as they can calculate, she added.
AARP is taking a position on the proposal to switch Social Security’s cost of living adjustments to a chained consumer price index. What that means, Matheis said, is the cost of living formula would be attached to the regular consumer price index reports, which look at the price of a set “market basket” of goods. When the cost of those goods go up, the consumer price index does, too. That increase would then influence any cost of living adjustments.
Part of the theory behind the chained consumer price index, which has been touted by Republican leaders and President Barack Obama as a possible money saver for Social Security, is that when, for example, steak prices go up, people stop buying steak and buy hamburger.
“The market basket of goods and services that retired people buy is different,” she said, adding seniors’ purchases are “heavy with medical care.”
It’s hard to shop around for less expensive medical care services and especially for prescription drugs, Matheis said. And seniors, on fixed, relatively low incomes, are already buying generic and less expensive items, so it’s harder for them to cut costs.
AARP is also reaching out to seniors on another hot button political topic, the Affordable Care Act, with an interactive website describing some of the changes the act brings to the health insurance market and directing people to resources within their state. The website is healthlawanswers.org.
Finally, AARP has also been tracking proposals for Medicare reforms. Matheis said officials with the organization see three ways to save the program money without cutting benefits to recipients. Hawaii’s Medicare beneficiaries spent an average of $3,236 on out of pocket health care costs in 2012. The average annual Social Security benefit for Hawaii residents — again, the bulk of many seniors’ income here — was $14,800.
First, Matheis said, is improving how Medicare identifies fraud.
“For every $1 you spend going after fraud, you save $3 to $7,” she said, adding Medicare officials are getting savvier about tracking down false claims.
The federal government has also taken some steps to make more generic prescription drugs available for seniors, Matheis said.
Finally, she said, better coordinating care for seniors. For example, sometimes a doctor may order a particular test, then based on the results, recommend a patient go to the hospital. Once there, the hospital may insist on repeating that test or procedure, even though the patient’s doctor already had test results.
“There’s a whole lot to be gained” through better coordinated care, Matheis said.