America’s Seniors Face The Perfect Storm 

By: John R Kotson - June 2004 

A storm is brewing on the horizon for America’s senior citizens. Escalating health care costs, corporations defaulting on pension plans, a poorly crafted Medicare prescription drug program, a dwindling Social Security fund and record federal budget deficits for as far as the eye can see have provided all the ingredients for “the perfect storm”. 

The current government leadership has turned a blind eye to the impending crisis. While Medicare is already operating at a deficit, the administration’s efforts are focused on revising Social Security, where no immediate crisis exists. 

According to the U. S. Census Bureau, the number of Americans without health insurance rose to 43.6 million in 2002. The National Coalition on Health Care (NCHC) predicts the number of uninsured Americans will reach 51.2 to 53.7 million in 2006. 

Many millions more are underinsured and struggling to pay their health care premiums. In many geographical areas, illegal aliens have placed a non-sustainable strain on the health care system. The NCHC estimates that insurance premiums are increasing at 3-4 times the rate of annual inflation, with no end in sight. Meanwhile, corporate America is backing away from the “health care for life” promises made to employees to retain their loyalty during their working careers. 

NCHC also claims that health care costs in America are more than twice the median level for the 30 leading industrialized nations, but the quality of health care delivered ranks 27th. The former CEO of Kaiser Permanente estimated that 400,000 deaths occur each year through mistakes in the use of medical technologies. This nation is in urgent need of a new health care program that provides affordable, quality healthcare to all Americans. 

The Medicare prescription drug program needs serious rework. Part D prohibits Medicare from negotiating discount drug prices, prevents the importation/re-importation of drugs from other FDA approved countries and rewards industry with cash incentives to continue a minimal prescription drug benefit. 

Several bills have been introduced in both houses of Congress to address these problems, but are going nowhere. The President has already stated he will veto any attempts at revising his legislative “jewel”. Many corporations are already advising their retirees to expect significant changes in their drug benefits next January, when the bill becomes law. Meanwhile, Medicare premiums and deductibles are increasing at double-digit rates, while the benefits are reduced yearly. 

The picture is also bleak for traditional pension plans. 

The Pension Benefits Guarantee Corporation (PBGC), the agency that insures pensions against default, estimates that America’s pension plans are under funded by over $450 billions. 

We have seen large corporations default on their pension plans, e.g., Bethlehem Steel, US Airways, United Airlines and many more are lining up to dump their obligations. Meanwhile, the PBGC now suffers a $23.3 billion deficit and it is expected to grow rapidly. 

America’s taxpayers are facing a bail out of the PBGC similar in scope to the Savings and Loan bail out of the early 1990’s. Urgent reforms are needed to protect America’s failing pension system. 

Back in the early 1980’s, Social Security reforms where enacted with the objective of providing a huge surplus to insure solvency when the “Baby Boomers” retired. However, Congress has spent the surplus on other programs for over 20 years. Now, all that exists in the Social Security fund are low yield government treasury notes. 

This is a perfect example of the “Fox guarding the Henhouse”. President Bush claims the sky is falling, when in reality all that is needed to make Social Security solvent are minor reforms; increasing the cap on payroll deductions and stop spending the yearly surplus now. 

All the ingredients are in place for the “perfect storm” and lifestyles of older Americans are facing a sharp decline. Many will sink into poverty. 

Why does Congress not take actions to head off this impending crisis? The huge Federal budget deficits created preclude funding solutions to the problems that will erode the standard of living of all working Americans. 

Young Americans should pay attention, because the social problems that now affect the elderly will eventually disenfranchise the entire working class. Most corporations are already significantly reducing benefits for current employees. 

Ask your Representatives the following questions; why can our Government provide free health care to all Iraqi citizens, but cannot provide an affordable health care program for all Americans? Why have corporations been permitted to walk away from paying promised health care and pension benefits to retirees? Why do we have a Medicare prescription drug bill that was written by corporate lobbyists? Why does Congress continue to spend the Social Security surplus when they knowingly are creating insolvency? How do we convince our government to prioritize the problems of its citizens over those of special interests? 

The author, John R Kotson is Chairman of the Rocky Mountain Action Coalition (RMAC) of the National Retirees Legislative Network (NRLN)

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