NEW YORK (MainStreet) -- Strapped for savings, and with less financial leverage in a sour economy, American seniors are in a tight spot. Problems with the federal budget deficit are on track to be dealt with through Medicare cuts and some amount of tax increases, both of which are bad for the nation’s older citizens.
Nobody knows how or when Congress will cut Medicare or any other major government entitlement programs. But ask most economists and they’ll say it’s not a matter of “if” but rather a matter of “when” programs like Medicare will have to be cut – or risk the U.S. government going into default.
But some cuts are already cast in stone – Medicare payments to physicians, for example, will be cut on Jan. 1, 2012. That alone could have a cascading effect on Medicare recipients, as Peter W. Carmel, president of the American Medical Association, pointed out in a recent statement.
"The AMA is deeply concerned that continued instability in the Medicare program, including the looming 27% cut scheduled for Jan. 1, will force many physicians to limit the number of Medicare and TRICARE patients they can care for in their practices,” Carmel said. “Congress has ignored the reality that short-term patches have grown the problem immensely. The cost of repealing the formula has grown 525% in the past five years and will double again in the next five years.”
After the Congressional supercommittee failed to reach a debt agreement last week, a new study says that 61% of seniors on Medicare said that they would support tax hikes over Medicare cuts.
The survey of 396 Medicare recipients, conducted by San Mateo, Calif.-based research organization Extend Health, said that 61% would go along with tax cuts to shore up the U.S. debt picture if it meant “fewer cuts to Medicare.”
Survey respondents also told study authors that, while they were happy about the supercommittee’s failure to reach an agreement (because it spared Medicare cuts in the short-term), 61% said a deal would have been better for the U.S., and another 65% said a debt commission deal would have been better for their kids.
Now that the debt supercommittee failed to strike a deal, $1.2 trillion in automatic cuts will be made starting in 2013 – and those Medicare payments to physicians are high on the list, even though direct Medicare cuts (meaning of services to consumers) are off limits so far on the automatic 2013 cuts.
In any case, the two-fold message to Americans is clear: Legislators showed that kicking the financial can down the road is preferred over clarity and progress in reducing the $15 trillion accumulated right now in public debt, and, as exemplified by the Extend Health survey, Congress seems ready to ignore many older Americans’ preference to tax increases rather than mess with Medicare.
Whether tax hikes are enough to save Medicare is a “kick the can” special for another day.