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GOP Platform Breaks Trump's "No Cuts" Promise on Social Security and Medicare

July 25, 2016

If nothing else, Republicans used their convention in Cleveland to get their hate on. The delegates who cheered Chris Christie's ersatz prosecution of Hillary Clinton had already made "lock her up" the event's lasting sound bite. Offstage, Trump surrogates accused Clinton of "treason" and called for her execution by hanging or firing squad. The foaming at the mouth crowd raged about "radical Islam," an all-encompassing enemy they could neither describe nor explain how to defeat. Meanwhile, the delegates approved a platform would bestow 14th Amendment protections to fetuses while denying them to actual, living LGBT Americans.
But if Mitt Romney's 2012 campaign ushered in the era of "Post-Truth Politics," Donald Trump's coronation marked the rise of the "No Policy Candidate." For example, on Wednesday, advisers Stephen Moore and Lawrence Kudlow announced their proposed overhaul of Trump's gigantic tax cut windfall for the wealthy, supposedly reducing his Treasury-draining from $10 trillion to $3 trillion over the next decade. But even more telling when it comes to Donald Trump's disinterest in actual policy is what the 2016 Republican Platform declared about health care and retirement income for future seniors. After a year of promising Americans he would "save Social Security and Medicare without cuts," nominee Trump looked the other way as his party's platform endorsed House Speaker Paul Ryan's plans to gut both.
Next week in Philadelphia, Democrat Hillary Clinton will tout her proposal to expand Social Security financing and benefits, a position enjoying growing support in Washington, DC. And from the moment he jumped into the GOP race, Donald Trump made clear he would oppose any reductions to the pension plan for 60 million-plus Americans. In an April 2016 ad, the reality TV star turned GOP frontrunner pledged he would "save Social Security and Medicare without cuts." As he put it at a December 11, 2015 rally in Iowa:

"So, you've been paying into Social Security and Medicare...but we are not going to cut your Social Security and we're not cutting your Medicare. We are going to take jobs back from all these countries that are ripping us off and we are going to become a wealthy country again. And we are going to be able to save your Social Security. We are not taking it...so there is tremendous waste, fraud, and abuse. What we are going to do is we're going to save Medicare, we're going to save Social Security, we are not going to raise the age, and we're not going to do all the things that everybody else is talking about doing. They are all talking about doing it and you don't have to."

And Trump's commitment to the two programs keeping millions of America's seniors from poverty did just stem from his belief that "people have a contract." As he explained after meeting with Speak Ryan back in May, his "no cuts" position combined moral principle and political expediency:

"From a moral standpoint, I believe in it," Trump said of maintaining Social Security benefits. "But you also have to get elected. And there's no way a Republican is going to beat a Democrat when the Republican is saying, 'We're going to cut your Social Security' and the Democrat is saying, 'We're going to keep it and give you more.'"

But then the GOP's delegates got to Cleveland and decided something else. In their platform which mentions "abortion" 37 times and "Social Security" just five, the Republicans declared:

We reject the old maxim that Social Security is the "Third Rail" of American politics, deadly for anyone who would change it. The Democratic Party still treats it that way, even though everyone knows that its current course will lead to a financial and social disaster. Younger Americans have lost all faith in the program and expect little return for what they are paying into it. As the party of America's future, we accept the responsibility to preserve and modernize a system of retirement security forged in an old industrial era beyond the memory of most Americans. Current retirees and those close to retirement can be assured of their benefits. Of the many reforms being proposed, all options should be considered to preserve Social Security. As Republicans, we oppose tax increases and believe in the power of markets to create wealth and to help secure the future of our Social Security system. Saving Social Security is more than a challenge. It is our moral obligation to those who trusted in the government's word. [Emphasis mine.]

Now, Social Security and Medicare combined account for roughly 40 percent of all federal spending. As the New York Times reported in June, the programs' trustees reported that:

Social Security trust funds for old-age benefits and disability insurance, taken together, could be depleted in 2034, the same year projected in last year's report. Tax collections would then be sufficient to pay about three-fourths of promised benefits through 2090.

But with their platform, Republicans have ruled out new revenue for Social Security by either raising payroll taxes or lifting the current income cap for taxable earnings at $118,500. That means to "save Social Security" the GOP would either insist on slashing benefits or "believe in the power of markets." And that is just a non-threatening way of saying "privatization."
Now, neither the latest GOP budgets nor Speaker Ryan's "Better Way" policy blueprint mention Social Security privatization. (The "Better Way" doesn't mention it at all.) But that doesn't mean the transformation of Social Security into a system of private accounts has stopped being a cherish Ryan dream.
Paul Ryan's 2010 budget proposal laid out his vision:

Rep. Paul Ryan, (R-WI) the ranking Republican on the budget committee, recently detailed the Republican plan for Social Security that preserves the existing program for those 55 or older. For younger people the plan "offers the option of investing over one-third of their current Social Security taxes into personal retirement accounts, similar to the Thrift Savings Plan available to federal employees."

But as Jonathan Chait recounted in April 2012, Ryan's dream dated back even further. And it made George W. Bush's "fuzzy math" seem brilliant in comparison:

In 2005, when Bush campaigned to introduce private accounts into Social Security, Ryan fervently crusaded for the concept. He was the sponsor in the House of a bill to create new private accounts funded entirely by borrowing, with no benefit cuts. Ryan's plan was so staggeringly profligate, entailing more than $2 trillion in new debt over the first decade alone, that even the Bush administration opposed it as "irresponsible."

Make that doubly irresponsible. As the Bush Recession which began in December 2007 illustrated, steep downturns on Wall Street could imperil those private retirement accounts. Just as daunting, as Vice President Al Gore explained to George W. Bush during the 2000 campaign, "the trillion dollars that has been promised to young people has also been promised to older people, and you cannot keep both promises." As Matthew Yglesias summed it up:

What privatizers want to say is that current retirees will keep getting benefits and future retirees will be okay despite our lack of benefits because we'll have private accounts. But current retirees can't get benefits if my money is in a private account. And my account can't be funded if I'm paying benefits for current retirees.

Mercifully, the idea of Social Security privatization was as scary to Paul Ryan's GOP colleagues in 2010 as it was to the American people in 2005. But if private accounts for Social Security disappeared from future Ryan budget plans, the privatization of Medicare did not. And no matter how he's reworked it since, Ryan's Medicare plan would be very bad news for America's growing population of retirees.
Despite Donald Trump's repeated pledges not to change Medicare, the 2016 GOP platform does just that and in very much the way Speaker Ryan has proposed:

Medicare's long-term debt is in the trillions, and it is funded by a workforce that is shrinking relative to the size of future beneficiaries. Obamacare worsened the situation -- and imperiled seniors -- by imposing hundreds of billions of dollars in cuts to Medicare providers to pay for its new spending. When a vital program is so clearly headed for a train wreck, it's time to put it on a more secure track. That is why we propose these reforms: Impose no changes for persons 55 or older. Give others the option of traditional Medicare or transition to a premium-support model designed to strengthen patient choice, promote cost-saving competition among providers, and better guard against the fraud and abuse that now diverts billions of dollars every year away from patient care. Guarantee to every enrollee an income-adjusted contribution toward a plan of their choice, with catastrophic protection. Without disadvantaging present retirees or those nearing retirement, set a more realistic age for eligibility in light of today's longer life span.[Emphasis mine.]

(It should be mentioned that Obamacare did not "worsen the situation." Every Republican budget since the Affordable Care Act was passed in 2010--including the Romney/Ryan platform in 2012--depended on the same $800 billion in Medicare savings, but used them to help fund gigantic tax cuts for the rich. That's why the Obamacare "repeal" bill shepherded through Congress by Mitch McConnell and Paul Ryan specifically noted that "all provisions of PPACA and HCERA are repealed except for the changes to Medicare.")
To better understand Ryan's current House GOP plan for converting Medicare in a so-called "premium support model," it's helpful to track its evolution (no pun intended) over the years. All represent a de facto rationing scheme, as underfunded vouchers to purchase private insurance inevitably shift the costs of health care onto seniors themselves.
Ryan's first crack called for killing Medicare altogether, giving the elderly a voucher to apply towards the purchase of coverage from private insurers. But by 2030, the nonpartisan Congressional Budget Office (CBO) warned, "the beneficiary's share would be 68 percent" of the premiums and out-of-pocket costs in a typical Medicare plan. As Ezra Klein explained in the Washington Post in February 2010:

It's hard, given the constraints of our current debate, to call something "rationing" without being accused of slurring it. But this is rationing, and that's not a slur. This is the government capping its payments and moderating their growth in such a way that many seniors will not get the care they need.

In response, Ryan protested one month before the passage of Obamacare:

"Rationing happens today! The question is who will do it? The government? Or you, your doctor and your family?"

Of course, Congressman Ryan left out the real culprit responsible for leaving 50 million Americans uninsured and another 25 million underinsured before the implementation of Obamacare: the private insurance market.
Nevertheless, Ryan has continued to rely on the private insurance market to reform Medicare despite the government's far lower overhead and cost growth. In his next iteration, "vouchers" were replaced with "premium supports." Ironically, Ryan has preserved traditional "public option" Medicare as one of the choices on his insurance exchanges. Still, due to private insurers cherry-picking healthier seniors, Ryan's Medicare reform will mean, as the CBO found in 2012, "that new beneficiaries could pay up to $2,200 more by 2030 and up to $8,000 more by 2050." (For that, Politifact named Ryan its "Health Care Policy Maker of the Year in 2011.) Ironically, as Klein pointed out at the time about the plan Ryan hatched with Alice Rivlin:

If Ryan-Rivlin will unleash ferocious innovation that holds costs down, then so too should the Affordable Care Act. So at the end of our conversation, I asked Rivlin, who supported PPACA, if I was missing something. She laughed. "I keep talking to Paul and trying to convince him of that," she said. "But even if he agreed with me, he couldn't say so."

That's exactly right. For the purposes of killing traditional government-run Medicare, Paul Ryan endorses everything he hates about Obamacare. Health insurance exchanges selling competing plans, subsidies for premiums based on income, navigators, risk corridors and even a public option, it's all there. But to maintain plausible deniability, Paul Ryan and the GOP leave out all the numbers that matter. The value of the premium support, assumptions about the rate of health care cost growth, assumptions about the private plans "cherry picking" healthier seniors, mechanisms for capping Medicare program cost growth and so much more is completely missing. As the summary from his "Better Way" proposal puts it, "Our plan takes a three-step approach to save and strengthen the program":

Provide immediate relief from Obamacare's raid on Medicare. Our plan strengthens Medicare Advantage and repeals the most damaging Medicare provisions in Obamacare, including the unaccountable Independent Payment Advisory Board.
Improve Medicare's fiscal health. Our plan adopts bipartisan reforms that make Medicare more responsive to patients' needs, while at the same time updating payment models that are outdated and inefficient.
Preserve Medicare for future generations. Starting in 2024, our plan gives future beneficiaries the opportunity to choose from an array of competing private plans alongside traditional Medicare and helps seniors pay for or offset premium costs for the plan of their choice.

However you slice it, though, future seniors will lose out. Ryan proposes raising the retirement age to 67. But because both he and Trump repeal Obamacare and replace it with tax credits, starting in 2020 65 and 66 year olds will have to buy their own insurance. As Howard Gleckman explained in Forbes:

Like other consumers, they'd receive new tax credits to help subsidize the cost, though the blueprint does not specify the size of those credits. In addition, the proposal would allow insurers to charge relatively higher premiums to older consumers than they can under the Affordable Care Act.

Ryan would put his hand on the scales in favor of private insurers. Under Obamacare, the subsidies about 30 percent of Medicare recipients use today to purchase coverage from private insurers by an identical package of benefits. In contrast, "Ryan would increase those subsidies and allow MA plans to create their own packages of services and benefits." Healthier, wealthier Americans would gravitate to private carriers eager to have them, while older, poorer and sicker retirees would probably stick with traditional Medicare, making it less cost-competitive over time. As Gleckman warned of Ryan's "Better Way" in June:

As he has proposed many times in the past, Ryan is backing a plan that would effectively provide a fixed dollar subsidy that seniors would use to purchase Medicare insurance. That's in contrast to today's model, where Medicare pays a percentage of the cost, whatever it is. Such a plan would effectively shift the risk of health care cost increases from taxpayer to seniors. The idea has some bipartisan support, but the details matter. The biggest: How would the subsidy be calculated and by how much would it increase each year. The blueprint released today was largely silent on those issues.

The Republican platform released this week is completely silent on all those issues. But going forward, Democrats can't allow the silence to continue from Donald Trump and the party that nominated him. After all, Trump attacked his Republican rivals during a March 2 appearance in Virginia:

"We are not going to cut Social Security. We are not going to cut Medicare...Now, you have waste, fraud, abuse in Social Security and Medicare. We'll take care of that. But you're not going to be cut. You've been paying into your plans, you've been paying into Social Security for years. Now they're coming up to you, it's getting to be that time, me, I don't want the Social Security, but it's getting to be that time where you're going to need it. And I think it's unfair that after all these years they want to cut you."

Bu that was then and this is now. And now, as Harris Meyer reported this week for Modern Healthcare, "The Paul Ryan wing of the party mostly carried the day, getting its conservative health policy proposals into the platform" leaving "no trace of presumptive presidential nominee Donald Trump's repeated campaign statements about not touching Medicare, Medicaid, and Social Security and making sure all Americans have healthcare when they need it." And Trump's refusal to admit to--or even supply--the basic details of policy can mean only one thing for American voters concerned about their Medicare and Social Security. If they make him President of the United States, Meyer concluded, voters will be left to the mercy of "Donald Trump to fix it, or else he'll hand off to Ryan."
When it comes to Americans' health and financial security in retirement, either prospect is a frightening one.


About

Jon Perr
Jon Perr is a technology marketing consultant and product strategist who writes about American politics and public policy.

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