Federal Expenditures: SeNIOR SERVICES & BENEFITS

1. Media Management Pharma Alliance International Presentation February, 2013 Federal Expenditures:SeNIOR SERVICES & BENEFITS

2. Deficits: How we got here

3. Discretionary vs. Mandatory Spending nationalpriorities.org/en/budget-basics/federal-budget-101/spending

4. Major Spending Categories www.cbpp.org/cms/index.cfm?fa=view&id=3884

5. Deficit Reduction to Date www.offthechartsblog.org/program-cuts-far-outweigh-tax-increases-in-deficit-reduction-to-date

6. Future Deficit Reduction • Democrats want 1:1 ratio of cuts to revenues • Most agree to this ratio in current negotiations • Some want more revenues now so overall reductions dating back to 2011 is 1:1 • Republicans want just spending cuts • No more revenues for deficit reduction; any grand bargain tax reform must be revenue neutral • House GOP wants on balanced budget in 10 years, meaning significant cuts to senior programs

7. What Sequester Means www.offthechartsblog.org/how-big-are-the-automatic-sequestration-cuts-scheduled-for-march-1

8. NDD - Sequester Dollars • *$13 million in mandatory funding at AoA and the $1 billion Prevention and Public Health Fund also subject to sequester, but at different rates. • **OMB estimates that practical effect of sequester levied on 7 months of funding would be a 9% cut.

9. NDD - Sequester People • 4 million fewer home-delivered meals • Nearly 2 million senior transportation rides lost • 1.5 million seniors are denied personal care services • Almost 485,000 seniors lose access to health promotion and disease prevention • 290,000 senior households are denied LIHEAP energy assistance • 114,000 senior households receive reduced Section 202 unit maintenance and supportive services • 2.2 million fewer SCSEP community service hours, at a value of nearly $50 million, including at least a $17.5 million cut in wages and benefits for low-income older workers www.lcao.org/lcao-sequestration-issue-brief-oct2012

10. Short-term Sequester Alternatives Senate Democrats: American Family Economic Protection Act (vote expected next week) Replace sequester through Jan, 2, 2014 $110 billion total, split evenly between cuts and revenues Cuts: half from defense reductions, half from ending farm subsidies Revenues: adopting the “Buffet Rule,” ending outsourcing deductions, closing oil industry tax loophole. Endorsed by White House Senate Republicans – may be introduced next week

11. Short-term Sequester Alternatives House Republicans Insisting Senate act first, demanding balanced budget in 10 years Last 112th Congress bill narrowly passed in December Over $300 billion in cuts, no revenues Social Services Block Grant (SSBG) and Prevention & Public Health Fund eliminated, SNAP and Medicaid slashed House Democrats: Stop the Sequester Job Loss Now Replace sequester though December $120 billion total, evenly split between cuts and revenues

12. Long-term Sequester Alternatives What is a balanced package? www.cbpp.org/cms/index.cfm?fa=view&id=3885

13. Mandatory Spending - Medicare

14. Mandatory Spending - Medicare

15. Senior Groups on Cutting Medicare Groups support containing health care costs, not cutting Medicare benefits or shifting more costs on to seniors. Most people on Medicare have low or modest incomes, and high out-of-pocket health costs. They cannot afford to pay more. Medicare per person cost growth is declining and expected to remain low. The level of additional Medicare cuts currently being considered is unrealistic and too high. Americans strongly oppose cutting Medicare to reduce the deficit, including about 70% of Republicans and 85% of Democrats. www.lcao.org/category/health

16. Medicaid & Seniors – Long-term Care • Medicaid is the primary payer for long-term care (LTC), paying about 62% of total LTC costs. • LTC comprises about one-third of total Medicaid spending. • About 2.8 million people received Medicaid HCBS in 2007, and 1.7 million received Medicaid nursing home care. • With nursing home costs averaging over $75,000 per year, middle class seniors quickly spend-down their life savings on to Medicaid. • Roughly 7 in 10 people turning age 65 will need LTC at some point, and about 10,000 baby boomers are turning 65 every day. www.lcao.org/lcao-medicaid-block-grant-issue-brief-oct2012

17. Medicaid & Seniors – Other Coverage • Medicaid also pays Medicare premiums for almost 5 million low-income beneficiaries, who otherwise would not be able to afford Medicare, through two programs: • The Qualified Medicare Beneficiary (QMB) program, which pays Medicare’s high premiums, deductibles, and copayments for beneficiaries with incomes below 100% of poverty (about $11,000) and very low non-housing assets. • The Specified Low-Income Medicare Beneficiary (SLMB) program, which pays premiums for those with incomes from 100% to 120% of poverty and low assets. • In many states, Medicaid also pays for services that Medicare does not cover, such as dental care, hearing aids and eyeglasses. www.lcao.org/lcao-medicaid-block-grant-issue-brief-oct2012

18. Medicaid Per Capita Caps Caps federal funding to states based on the number of Medicaid beneficiaries. • States would receive fewer funds over time, with deeper cuts every year as federal funding fails to match inflation. • States experiencing higher than usual Medicaid spending per person would no longer receive federal funds above its cap. • Cuts will likely most heavily fall on seniors and people with disabilities who are the most expensive recipients of Medicaid. • The impact would vary by state. States with low current spending with little room to cut could be penalized for their efficiencies. www.lcao.org/lcao-medicaid-per-capita-caps-issue-brief-nov2012

19. Senior Groups on Cutting Social Security Social Security is a self-financed, fully funded program and any reduction in it does nothing to address the shortfall in the rest of the federal budget.  Social Security benefits are already modest.  In December 2012, the average Social Security retirement benefit was only $1,261 a month, or about $15,132 a year.  Groups oppose efforts reduce the Social Security Cost of Living Adjustment (COLA) through the use of a “chained” Consumer Price Index (CPI).  A more accurate COLA measure is the consumer price index for the elderly (CPI-E) because it factors in the disproportionate amount seniors spend on health care. www.lcao.org/ltr-to-congress-re-chained-cpi-122712

20. Resources NCOA Federal Budget Advocacy Toolkit NDD United Campaign Toolkit Leadership Council on Aging Organizations For more information e-mail: info@PharmaAlliance.org 202 872 5567