Payroll Tax Cut, “Doc Fix” Likely to be Rolled into One Catch-All Package

December 09, 2011

Elected officials are discussing several competing plans to cut the payroll tax that is used to fund the Social Security Trust Fund. The employee share of the tax is scheduled to go back to 6.2% on January 1, from a current rate of 4.2%, if no legislation is passed, and President Obama wants to lower the tax to 3.1% next year. A Democratic-written bill in the Senate would lower the rate to that 3.1% level. It is financed chiefly by a 1.9% surtax on income over $1 million, a proposal that is almost universally opposed by Republicans, and GOP senators are expected to defeat the measure.
 
A House bill would drop next year’s payroll tax to 4.2% - this year’s level. It would be financed by extending the current pay freeze on federal workers through 2015 and many other, smaller savings, including charging higher Medicare premiums to higher-earning seniors.

Bipartisan concerns that extending the payroll-tax cut would weaken Social Security are complicating the effort to allow the tax break for workers. Sen. Bernie Sanders (I - Vt.), a leading liberal voice, last week voted against a Democratic bill to extend the tax cut. That put him on the same side as Sens. Jon Kyl of Arizona, the No. 2 Senate Republican, and Jerry Moran (R - Kan.), a member of the tea-party caucus. “If you do it for two years, you know what it's probably going to be harder to break that habit in the third year,” Sen. Sanders said, adding, “in which case you've got a permanent process by which you've cut the payroll tax and diverted huge sums of money.”

Republican and Democratic aides predicted in Roll Call that the payroll tax cut will be extended by Congress in an end-of-the-year catch-all package that is likely to include extensions of unemployment benefits and increased Medicare payments to doctors. If no action is taken on the Medicare reimbursement rate for doctors, it would fall by a whopping 27% on January 1.

Mitt Romney Elaborates on Medicare
Republican presidential hopeful Mitt Romney clarified his plan to partially privatize the Medicare program during an interview with the Washington Examiner’s editorial board Wednesday morning, suggesting that he would allow Congress to vote on the amount of “premium support” credits (or vouchers) seniors receive to buy health care coverage every year. Like House Budget Committee Chairman Paul Ryan (R-WI), Romney, the former Governor of Massachusetts, seeks to gradually privatize the Medicare program for future enrollees by shifting seniors into private coverage and issuing everyone a “voucher” with which to purchase insurance. The plan also preserves the traditional Medicare option — known as fee-for-service — and seniors would be given a choice between using their vouchers towards the existing Medicare program or private insurance.

According to the web site www.thinkprogress.org [see actual article at http://bit.ly/usamBO], “the government’s vouchers won’t keep up with premium increases, and as a result, seniors who cannot afford to pay anything above the government contribution may be stuck in cheaper and perhaps lower quality health plans that contract with lower quality providers or cover fewer expensive tests and procedures.” During the interview, Romney reiterated that the voucher would not grow with health care spending and hinted that Congress would be responsible for approving voucher increases annually.

“Governor Romney is proposing to let the impulses of Congress, which the vast majority of the country sees as a dysfunctional body, create great uncertainty for America’s seniors,” said Edward F. Coyle, Executive Director of the Alliance.

“In addition, Romney wants to partially privatize Medicare and turn it into a voucher system that shifts costs to retirees,” said Barbara J. Easterling, President of the Alliance. “He has even proposed changing Medicare from a guaranteed program and turning it into one that Congress would have to vote annually to fund. That means the value of the vouchers that seniors would depend on to buy private insurance could vary each year based on the mood of Congress, leading to more gridlock.”

Health Care Law Has Saved the Average Senior $569 on Prescriptions in 10 Months
More than 2.65 million Medicare beneficiaries have saved more than $1.5 billion on their prescriptions this year, a $569-per-person average, while premiums have remained stable, the federal government announced on Tuesday. That's because of the provision of the health care law that put a 50% discount on name-brand prescription drugs in the “doughnut hole,” the coverage gap that exists before catastrophic coverage begins. Before the health care law took effect, Medicare patients had to pay full price for their prescriptions once they reached that gap. Drug companies now must provide the 50% discount in order to participate in the prescription plan. The prescription data are through the end of October. As of the end of November, more than 24 million people, or about half of those with traditional Medicare, have gone in for a free annual physical or other screening exam since the rules changed, allowing those benefits to be offered at no cost to patients.

Something on Your Mind?  Write Letter, Win Pen!
Have an opinion about the 2012 elections?  Is there something you want other seniors in your community to know about?  Take a moment to write a letter to the editor, and if it is published, the Alliance will send you a free, union-made “Retirees with the Write Stuff” pen. “Letters to the editor are free and are often widely read by one’s neighbors,” said Alliance Secretary-Treasurer Ruben Burks. “Given the wealthy, corporate interests of Wall Street that we face, it’s nice to have an option that doesn’t cost money.”

In the last few months, Mel Aaronson, Lou Albano, Sam Burnett, Leon Burzynski,  Tony Fransetta, Dave Friesner, David Jones, Lewis Neuman, Jr., John Pernorio, Donald Singer, Margot Smith, Dennis Tracey, Norm Wernet and Charlie Williams have contributed to their local papers. If you had a letter published recently, please email aracommunications@retiredamericans.org.

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