Obama’s Social Security, Medicare Cuts—No Grand Bargain for Latinos

By Eva Dominguez

The Social Security and Medicare cuts President Obama included in his proposed budget would disproportionately harm Latino Americans and are deeply unpopular in our community.

Rather than being part of a “Grand Bargain” offered to Republicans in exchange for possible tax increases, these cuts are a great betrayal of a group that proved essential to the president’s victory in the 2012 election.

President Obama won an unprecedented 71 percent of the Latino vote nationwide, allowing him to edge out Mitt Romney in the key swing states of Colorado, Florida, Nevada and New Mexico.

What many may not know is that like most Obama supporters, Latinos voted for the president in no small part, because they believed they could rely on him to protect Social Security, Medicare and Medicaid.

Latinos Depend More on Social Security

Latino voters believed President Obama in his 2011 State of the Union speech when he said we must “strengthen Social Security . . . without putting at risk current retirees, the most vulnerable or people with disabilities; without slashing benefits for future generations; and without subjecting Americans’ guaranteed retirement income to the whims of the stock market.”

Social Security matters to Latinos, because we depend on it more than any other group. Three in four (77 percent) Latino households ages 65 or older rely on Social Security for a majority of their income, and over half (55 percent) rely on it for 90 percent of their income.

That means Latino seniors are 18 percent more likely than the overall U.S. population to rely on Social Security for a majority of their income and 52 percent more likely to rely on it for 90 percent of their income.

A major benefit cut in the president’s proposal would be to switch the formula for calculating annual cost-of-living adjustment (COLA) in Social Security and other programs. This so-called chained-Consumer Price Index (chained-CPI), would allow inflation to erode program benefits over time—and would hit Latinos especially hard.

Because we are more likely to have lower career earnings, our Social Security benefits tend to be more modest to begin with—$12,491 each year for the average Latino senior and only and $10,438 per year for the average Latina senior.

After 20 years receiving benefits under the chained-CPI—when they would be in their 80s—the average older Latino would lose an accumulated $7,774 in benefits, and the average Latina elder would lose $6,307. After 30 years, the cuts would grow, resulting in total benefit cuts of $17,049 for average Latino seniors and $13,832 for average Latina seniors.

Change Would Increase Poverty

Worse still, the chained-CPI punishes Latinos for being blessed with higher-than-average life expectancy, often combined with greater levels of chronic illness. Because the chained-CPI cuts benefits more as beneficiaries age, it would hit long-living Latinos harder than most.

It’s no coincidence then that some experts fear that the chained-CPI will increase poverty among Latino seniors. More than one in four Latino seniors already lives in poverty—nearly twice the rate among white seniors.

The White House claims it will protect “the most vulnerable” chained-CPI, with a special “birthday bump” increase for those seniors at age 76. But in the past, such carve-outs have proven inadequate.

An analysis by Social Security Works showed that protecting all vulnerable groups from the chained-CPI would erase half of the budget savings from the measure.

Even if significant numbers of Latinos were shielded from the chained-CPI due to their lower incomes, this birthday bump might have unintended consequences. Carve-outs—special treatment—of any kind are likely to be misconstrued as handouts for ethnic groups. We already have to deal with enough nasty stereotypes portraying us as recipients of “welfare” or “government handouts.”

Proposed Medicare ‘Pain’

The Medicare benefit cuts President Obama proposes are also a step in the wrong direction that would cause Latino seniors real pain.

Rather than dealing with the high costs of health care, the budget shifts health costs to beneficiaries by increasing deductibles, premiums and co-payments. The president’s plan would also create a new surcharge.

The White House claims these cuts will make Medicare beneficiaries better health care consumers, but this is a flawed argument. Doctors—not beneficiaries—make medical decisions, so the idea that seniors can shop around for health care is ludicrous. As a result, Latino seniors who cannot afford the higher out-of-pocket costs are liable to forego needed care—until their conditions become more acute and costly to treat.

So-called means testing of Medicare will not only affect the rich—over time, it would increase premiums for Latino seniors making up to $47,000 a year.

Seniors already spend three times more of their incomes on their direct health care costs as the rest of the population. Under the president’s budget, the reduction in Latino seniors’ income would be two-fold: They would be hit by the chained-CPI, and their out-of-pocket health care costs would increase on top of that.

In addition, the president’s budget provision requiring a $100 co-payment per episode for home health care services could severely impact those who depend on home health aides to treat their diabetes and other chronic diseases. This would disproportionately affect Latino seniors who have higher rates of diabetes than the overall population.

For example, in Chicago, where diabetes is the most prevalent in the country, 25.8 percent of Latinos over 65 suffered from diabetes compared with 15 percent of non-Hispanic whites.

The White House has defended the proposed Social Security and Medicare reductions as “not ideal” measures needed to achieve a compromise with Republicans in Congress.

Not the Problem—But a Solution

There is no question that the president faces difficult choices as he navigates unprecedented Republican obstruction. But at times, President Obama appears to have adopted the Republican framing as well: That our budget problems are due to over-generous Social Security and Medicare benefits.

In fact, Social Security does not and legally cannot contribute one penny to the annual deficit and cumulative national debt. Medicare’s rising costs are due to skyrocketing private health care costs. In fact, Medicare has proven far more effective at controlling medical inflation than its counterparts in the private insurance market.

Latinos voted for a president bold enough to start a new conversation about the challenges of aging, health care and economic security, not someone beholden to the same old Republican talking points.

A real “adult” conversation on our aging boomer population would begin by acknowledging that America has a retirement security and health care crisis. Social Security and Medicare are the solutions to those crises, not the problem.

The Latino community appreciates President Obama’s leadership on immigration rights and health care reform. Now it is time for him to honor his promise to Latinos and other vulnerable elders to protect and strengthen Social Security and Medicare.

Eva Dominguez is the executive director of Latinos for a Secure Retirement, an advocacy group in Washington, D.C. This commentary was first posted on the New America Media website.

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April 18, 2013  Copyright © 2012 Eastern Group Publications, Inc.

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