AARP National Senior Policy Strategist Cheryl Matheis discusses the long-term challenges facing Medicare and Social Security.
Ted Simons: Changes to Social Security and Medicare are regularly debated in Washington, but the impact of those proposed changes is often overlooked in the discussion. Here to talk about the future of Medicare and Social Security is Cheryl Matheis, senior policy strategist. Good to have you.
Cheryl Matheis: Thank you for having me.
Ted Simons: Before we get into the option here and results there, what you're hearing from members, let's do some definitions. Define Social Security.
Cheryl Matheis: Whoa! Social Security is a program that was started back in the 1930s that provides a baseline of financial security for people who are older, retired, for widows, and for people who are disabled. Widows and children. It's something that came out in the new deal and it was decided that it wasn't really something our country wanted to do to have people who were no longer able to work or whose husband died, not be able to afford their rent, to afford their groceries, that we as a country could provide a basic level of financial security for people.
Ted Simons: How much has Social Security evolved over the years?
Cheryl Matheis: Well, it actually hasn't changed very much. It's a program that people pay into during their working lives. You know this if you get a paycheck there's an amount that comes out, 6.2% of your income and 6.2% from your employer into the Social Security trust fund. That investment you make throughout your working life protects you either when you become disabled or when you retire. So that you have that baseline of income which frankly is not enough money for most people these days to live on. They have to have some other retirement.
Ted Simons: Now Medicare. Definition.
Cheryl Matheis: Medicare is a little newer. It was started in 1965. It was started along the same lines. The idea was that older people could not get health insurance and that older people were becoming bankrupted. Their basic economic security was being jeopardized because they could not afford their health care because we have, as you know, an employment based health care system in the United States. When you don't have employment there was no way for older people to have insurance. So we decided as a nation under Lyndon Johnson to enact a program that would provide people who are 65 and over primarily with health insurance for the rest of their lives. Now, this is also a program that people pay into. People pay a Medicare tax. That also is something that comes out of your paycheck for part A, then Medicare is an alphabet soup. We have parts A, B, C, and D. A is hospital, part B, is doctor insurance. For part B, when you retire you sign up for part B as though it was a regular program and you pay a premium every month. Usually it comes out of your Social Security check to make it efficient.
Ted Simons: Okay. We have the definitions in there now. Let's talk about the challenges and the reason that your group has put out this questionnaire called you've earned it. What are the challenges facing Social Security and Medicare.
Cheryl Matheis: Because our population changes over the years and because right now we have a baby boomer population that's aging that will very soon be in retirement in full force in retirement, and we have far fewer people coming along in the worker line, those baby boomers didn't have enough children, then the people coming back from World War II, so we have trust funds that are not going to be able to pay full benefits. First let's say Social Security. In Social Security, the trust fund there is enough money to pay full Social Security benefits for the next 20 years. After that, there's enough money to pay 75% of benefits for the next 50 or 70 years. But 75% of benefits while that may sound good it's not good enough. When we get into the details we'll see why. So it is something, it's not in a crisis, but we want to address it before the crisis comes because as with everything, the sooner you address it, the less you have to do. So the less painful it is.
Ted Simons: And Medicare?
Cheryl Matheis: In about ten years Medicare part A, hospital trust fund, will not have enough money to pay the bills. So we have to do something about that as well. Medicare has a lot of other challenges and the challenges that Medicare has are a mirror. They are the same challenges that the entire health care system has, which is that health costs are just too darn high. We can't solve Medicare's health costs unless we do something about health costs in general because if you solve Medicare's health costs, by just cutting down the amount the government pays for Medicare, you're just shifting that cost over to someone else. You're shifting it over to the individuals, you're shifting it over to the hospitals that have to do more uncompensated care. In other words it's like a balloon where you push it in it will come out somewhere else.
Ted Simons: So with these challenges and this background, history, look to the future, what are some of the options as far as reforming Social Security and Medicare and are there a lot of options floating around? Are there just major ones that keep getting kicked back?
Cheryl Matheis: It's a really good question. Actually, that's the reason why AARP initiated this effort that we're calling you've earned a say. It's an effort to get really concrete, unbiased information out to the electorate, to our members and the general public, so they can look at these options that are out there. There are about a dozen options for Social Security and maybe about 15 for Medicare that you hear over and over again. Most of these options are not sole options, they are options that would be combined one way or another. But these are the ones being discussed essentially behind closed doors on Capitol Hill right now by our elected members of Congress. We want to make it transparent. We want to bring it out to the people so that they can understand the options because we believe that people are pretty smart, and once they know what the facts are, they can make up their own mind about what they want their elected representative to do.
Ted Simons: So how do you present these positions, again, without the political spin, without all this yelling and shouting and the claims of bias on either side?
Cheryl Matheis: This is what we decided to do. We went to some well known academic centers, what you call think tanks. We selected some respected experts in the area from thing tanks on -- think tanks on the right and on the left. For instance we have a respected analyst from the heritage foundation, which is a right leaning organization, and we have respected academics from Brookings institution, who deals with the health area, then another one from the national academy of social insurance, which is a more left leaning organization as it were although they wouldn't like me saying that. For Social Security. Then we have the two heritage on the other. We have one expert from each viewpoint and we have listed out the options for Social Security that dozen options, and we have let the experts write in their own words whether they are pro or con, what they think their best argument is in favor of or against that option. We have put them in really easy to access booklets that people can get when they go on the dedicated website which is called earnedasay.org. and you can get the booklets. If you want more detail because the booklets are fairly brief, you can click through to the full paper that each of these folks wrote and we also have what we call online tools, so you can practice yourself, say, how would you solve Social Security? How would you make Social Security strong? Which of these options would you put together and do they add up to 100% of the deficit?
Ted Simons: What kind of response are you getting?
Cheryl Matheis: Great response. We have got over 2 million people have engaged so far. We have people engaging both online, we're doing teletown halls, ones you do on the telephone, we're doing in person town halls. We have vans that are going to community centers and handing out -- we have questionnaires. There's a lost different ways that people are able to engage and actually on the website we have a way for people to go directly into their member of Congress if they like and tell them what they think. Whatever it is that they think.
Ted Simons: What are you seeing? What are the concerns of members? What are they telling members of Congress?
Cheryl Matheis: We don't know yet actually what they are telling members of Congress because that's a private conversation between them --
Ted Simons: Oh, that's no fun. Can't we eavesdrop on that?
Cheryl Matheis: It's really important for us to be completely transparent and for people to understand that we're not directing their conversation. We're trying to have them able to make the conversation. One of the things we heard back from all of the people we canvassed, I think it was like 49% of the people, essentially said we really want to have a say in this, and about 47% of the remaining people said, we really want to have a say but we don't think it's going to make any difference, so there's only a few number of people who don't want to be engaged but they just don't feel that they have a direct line to be heard.
Ted Simons: Going on to your website Tseemed like some of the biggest concerns of members, obviously we don't know what they are talking about with their representative, things like how long can folks work as they age. How much should seniors pay for health care. Those are very important topics, very big concerns.
Cheryl Matheis: They are big concerns. What's really important about this is that often when these programs are talked about, they are talked about as part of a budget cutting discussion. So then it becomes a number. It's how do we save this much? We have to save this up in Medicare because we're spending too much. Or we have to save more in Social Security because it won't pay out benefits. Before you do that you have to say, okay, if we raise the Social Security retirement age, which we have already done once. We raised it in 1983, if we raise it some more, so that you have to instead of going up to 67 it goes up to 68 or 9, what will that mean for people who physically are working at a job where they can't work any more? What are they going to do? What happens to employers? What does it mean for employers if they have to keep this work force and maybe it's not the right work force? What does it mean for younger workers who want to get into the work force if older people who actually would rather get out aren't able to get out. So it's really you have to look at it holisticly as to what it's going to mean and then make your decision.
Ted Simons: It's called you've earned a say. You'veearnedasay.org. Obviously people do want to have a say and they do have concerns. Is anyone listening? How do we know that those that have their fingers on the buttons of a yes and no vote are listening?
Cheryl Matheis: Well, we will know that after the elections this year because we think that it is very likely that legislative proposals on these programs are going to be debated in Congress in the next Congress. So after the first of the year. So we are in a window of opportunity right now. Between now and the elections we can actually as citizens get to our elected representatives and our candidates, tell them what we want them to do because we're the ones who hired them, and hold their feet to the fire. That's what we're trying to do. We think that if we do this, people's views will be known and the members of Congress will really have to think about what their constituents have told them instead of just making a deal based on on what they think because they haven't even asked their constituents or because their constituents haven't known enough about what the solutions might be to tell them their preference.
Ted Simons: We have to stop it there. Thank you so much for joining us.
Cheryl Matheis: It's been my pleasure.
Ted Simons: Thank you.
Cheryl Matheis:Senior Policy Strategist, AARP National;