Promises to Keep

This introduction was written by Southern Exposure editor Linda Rocawich, 37.

"There are those who claim that we've cut Social Security and Medicare benefits — nothing could be further from the truth." 

So said President Ronald Reagan during last fall's campaign, but was he telling the truth? These benefits are of vast importance to older Americans — and will be to all other Americans who plan to get old someday — but all the arguments by the '84 campaigners about who would do what to whom only confused matters. 

The truth is that Social Security, Medicare, and the other federal programs for the elderly have suffered at the hands of the Reagan administration. Broken Promises, a 1984 study of the state of the elderly during the past four years prepared by the National Council of Senior Citizens and the American Federation of State, County, and Municipal Employees, shows that federal spending was $24 billion less than it would have been had programs for elders been continued at their 1980 levels. 

Reagan and his people make much of the fact that the economic status of today's elders has steadily improved over the past few decades. For example, the president's Council on Economic Advisers, in its annual report issued early this year, announced that the nation's elders are now at a stage of economic parity with younger generations: "Thirty years ago the elderly were a relatively disadvantaged group in the population. That is no longer the case. The median real income of the elderly has more than doubled since 1950, and the income of the elderly has increased faster over the past two decades than the income of the nonelderly population." 

There is no question that there has been progress on this front. In 1970 about 25 percent of older people lived in poverty; today's figure is 14 percent — thanks largely to ad hoc increases in Social Security benefits and to automatic cost-of-living adjustments (COLAs), both enacted in the 1970s. But the income level of elders still lags far behind the rest of the population, and millions of them live just barely above the poverty line. According to Vita Ostrander, president of the American Association of Retired Persons (AARP), in March 1985 testimony before the House Budget Committee, "To state or even imply, as some have recently, that the elderly are now on a par or even better off economically is misleading." To back up her statement, she cited the following facts: 

• Median household income of the elderly is only half that of the nonelderly. 

• Older people still have the highest poverty rate of any adult age group. 

• Thirty-three percent of elderly women living alone have incomes below the poverty level. Median income for this group was $5,600 in 1983, just $800 above the poverty threshold. 

• For older minority-group members, the poverty rate exceeds 40 percent. 

A major worry of Ostrander and other advocates for the elderly is that these facts will get lost in the Reagan euphoria over average improvements in the well-being of elders — and they fear that Reagan administration rhetoric will be used to build a case for cutting federal programs for elders. Cyril Brickfield of AARP says, "The problem with this inaccurate and dangerous stereotype [that elders are now on an economic par with the rest of the population] is that it encourages those who would make wholesale, across-the-board cuts in income support and health care programs for older Americans." And, says Brickfield, millions of elders living just above the official poverty line will fall below it if Congress tampers with the COLA. 

The size of the elderly population is increasing and a larger percentage of older Americans rely on federal programs than any other age group, so federal spending on programs for elders is still high despite the cuts of the last four years. In 1983 the nation spent $177 billion from the Social Security and Medicare trust funds, plus $41 billion in general revenue on other programs for elders. Many of these latter programs, however, are still in place only because Congress refused to do as Reagan asked. 

The Older Americans Act, for example, provides social services for seniors: home-delivered meals, homemaker assistance, home health aid, transportation, legal aid, and counseling, as well as jobs for low-income people and research and training in the field of aging. Reagan proposed, unsuccessfully, to turn the social services programs into a block grant (cutting the funds in the process) and to terminate the jobs program; the research and training budget was cut by 50 percent through 1984, and a further cut of 50 percent is proposed in Reagan's current budget request. 

Of vastly more significance in terms of dollars spent are Social Security and its troubled child, the Medicare program. As the Social Security system approaches its fiftieth anniversary later this year, the retirement program is on a sound financial footing for the immediate future, thanks to a 1983 bipartisan compromise amending the Social Security Act to resolve the long-term effects of current demographics. 

Demographics affect Medicare as well, and it is still in trouble. But today's longer life-expectancies and the aging of the baby boom generation are not the major reason. Medicare will be bankrupt sometime around the end of this decade unless Congress does something, mainly because the wages that are taxed for the fund grow so much more slowly than do the costs and inefficiencies of the health care delivery system. 

Medicare was added to the Social Security system in 1965, over the vigorous opposition of the American Medical Association and its official spokesperson Ronald Reagan. It has grown from a program that spent $3.2 billion in 1967 to one that spent $57.4 billion in fiscal 1983, much to the enrichment of physicians and for-profit hospitals. Yet many seniors spend a larger proportion of their income on health care now than their fellows did before Medicare was enacted. Medicare's salvation will only come with some solution to the larger health care crisis. Many advocates point to the need, at a minimum, for a comprehensive cost-containment plan that limits physician and hospital revenues, without requiring beneficiaries to pay more than they already do. 

Under President Reagan, whose approach has been not cost-containment but shifting the cost, beneficiaries certainly have paid more. By 1987 proposals already enacted at his request will have cut $20 billion from the Medicare budget, largely at the expense of the elderly. Part A of the program provides hospital insurance financed with a portion of the Social Security payroll tax. The hospital deductible — the amount that a beneficiary must pay each year before Medicare will cover any costs — has risen by 75 percent (from $204 in 1981 to $356 in '84). 

Medicare's other component, Part B, is supplementary medical insurance that covers physicians' fees and some out-patient services. It is financed by general revenues (75 percent) and by premiums paid by beneficiaries who choose to participate (25 percent). The deductible on this coverage has risen by 25 percent since 1981 and the premiums have gone up by 53 percent. The 1986 budget Reagan proposed in February offers more of the same. U.S. Representative Claude Pepper, who is Congress's most outspoken supporter of the elderly, as well as its most elderly member, has some things to say about all this, beginning on page 140. 

As for Social Security, and particularly its best-known program of old age and survivors insurance, the years of debate over its insolvency have left it badly in need of a facelift by the public relations experts. The most popular legacy of the New Deal, Social Security was for many years a national sacred cow. But no more. According to a Washington Post-ABC News poll taken in January of this year, 43 percent of Americans don't think Social Security will exist when it is time for them to retire, and that includes 55 percent of those aged 31 to 44 and 66 percent of those from 18 to 30. 

As Congress continues to insist on funding this system with regressive payroll taxes that take bigger and bigger chunks out of workers' paychecks, this mistrust of the future raises doubts about the willingness of the young to pay for these retirement benefits to the old. A recent Washington Post article explored the "politics of perception" of Social Security, describing what many young people see as a "ripoff" by the elderly. Many, especially the working poor and middle-class two-wage-earner families, pay more in Social Security taxes than they do in federal income taxes. But most of the resentment, the Post reported, stemmed from the lack of faith in the program's future. One young woman explained, "I don't make that much, I'm trying to make a start in life and the retired people just take their chunk of my check. I'm not going to see one cent of that money when I get old. There won't be any Social Security. . . . I'm just giving this money away." 

In the past, when more people trusted the system's continuation, dislike of the taxes could be countered by pointing out not only the future benefits to the payer but also the current ones: the survivors' insurance, the disability insurance, the relief from the financial burden of caring for aging parents. Wilbur Cohen has had a hand in every piece of Social Security legislation, beginning with his service as research assistant to the director of the New Deal committee that crafted the program in 1935. He often speaks of the program as an "intergenerational compact," and he watches with dismay as mistrust undermines it. Beginning on page 141 he shares a few of the hopes that infused the Social Security pioneers and his hopes for restoring the nation's commitment to the program. 

The Reagan administration did not invent all these problems: the Social Security crisis was already under way in the 1970s; the Medicare trust fund would have gotten in trouble anyway, lacking a drastic plan to contain health care costs. But Reagan's administration has done little to help and much to hurt. Supplemental Security Income — a guaranteed minimum income program for the neediest (the elderly, blind, and disabled poor) — is a good example. Even Reagan admits the need for this sort of "safety net," and the program itself has not come under serious attack. But under his leadership eligibility requirements have been tightened, and the rules have been enforced with zealousness, rigidity, and unprecedented intimidation of older Americans. Richard Margolis describes what has gone on, beginning on page 137. 

Thus, what has happened in the past four years to the various federal programs for elders differs in details. But the Reagan administration's approach fell into a pattern early on. The 1981 White House Conference on Aging was a major opportunity to show old people where they stood with the new regime. A description of what happened follows.