N o . 8 5 Fall 2011
News & Information for AFSCME Retiree Members
Flood of New Attacks on Medicare,
Medicaid and Social Security
Chapters in Action
Nevada Sub-chapter 153
“Building member participation is job one,” said Nevada
Sub-chapter 153 Pres. Correan Baker (seated above)
at the sub-chapter’s recent conference in Las Vegas.
Membership activism and mobilization were the top
issues for discussion at the recent meeting, which
brought together the sub-chapter’s diverse membership.
Members belong to AFSCME retiree chapters all across
the country, but have made Nevada their permanent
retirement home.
Sub-chapter leaders helped boost attendance by
organizing a phone bank, as well as sending written
invitations to all the members. The strong turnout
resulted in lively discussions among the retirees on such
topics as how to build a retiree committee and how to
lobby elected officials.
Florida
Three Florida sub-chapters recently held founding
conventions in the south east, north and north west
parts of the state. As workers, the members belonged
to AFSCME Florida Council 79. Delegates elected officers and passed resolutions to defend Social Security,
Medicare, the Florida retiree health insurance subsidy
and the Florida Retirement System’s defined benefit
pension plan.
Josephine Ball Sivils (shown at the podium), a leader of AFSCME Maryland Retiree Chapter 1, represented concerned seniors at a recent Capitol Hill news conference. Sivils spoke out against the
House resolution to privatize Medicare and was joined by numerous members of Congress, including U.S. Reps. Nancy Pelosi (D-CA), Jan Schakowsky (D-IL) and Xavier Becerra (D-CA). The bill
passed the Republican-led House on a party line vote, but was blocked by the Senate.
T
his fall, a “Super Committee” (officially the Joint Select Committee
on Deficit Reduction) made up of
12 members of Congress has been working on a plan to reduce the federal deficit
by at least $1.2 trillion. Its six senators and
six representatives — half Democrats, half
Republicans — have been meeting since
September, behind closed doors.
ON THE TABLE. Everything in the federal
budget is supposed to be on the table, including
military spending, education, taxes, and, of course,
Medicare, Medicaid and Social Security. The
Republicans on the Super Committee say they will
not support any tax increases, even on the wealthiest Americans and corporations. Without new
revenue, the committee’s focus will almost certainly be our retirement lifelines. Big benefit cuts
are considered for all of them.
For example, some in Congress and on the
Super Committee want private insurers to take
over Medicare. Apparently they’ve forgotten that
Medicare was established as a government system in 1965 because private insurance companies
refused to sell affordable coverage to seniors. Back
then, private insurers claimed seniors used too
many services to be profitable. Even now, insurers
tend to drop out of the senior market whenever
their profits dip.
Despite this unreliability, the Republican
majority in the House of Representatives passed
a budget bill in April that privatized Medicare for
future retirees, ending Medicare’s system of guaranteed benefits and replacing it with government
subsidies for private insurance. Fortunately, the
Senate rejected the House bill, but now it’s back
on the table with the Super Committee.
MEDICARE ATTACKS. Privatization is only
one way in which the Super Committee could
undermine Medicare. Other proposals receiving
serious consideration would raise the Medicare
eligibility age from 65 to 67 and increase premiums, deductibles and co-pays.
Add to these the potential cancellation of
the Medicare improvements enacted under the
new health care reform law. The improvements
include the scheduled phase-out of the Part D
prescription drug “donut hole,” the crackdown on
Continued on page 2
Putting the Economy Back to Work
for Working Families
The South East Florida Sub-chapter met in West Palm
Beach, where State Rep. Jeff Clemens (D) spoke about
the recent political attacks on Florida workers and
retirees. The members elected their first slate of officers, who are pictured above. From left to right: Susan
Anderson (trustee); Louise Taggart (recording secretary); Carol Ann Loehndorf (president); Aaron Augustus
(secretary-treasurer); and Georgia Gilbert (executive
board). Not pictured: Vice-Pres. Jugal Arora.
Continued on page 2
W
hen George W. Bush left the White
House in January 2009, the American
economy had crashed, creating a
vicious cycle of unemployment and economic
stagnation. The nation was in the grips of the
Great Recession, which continues in many ways
to this day.
How do we break the downward cycle and
strengthen our economy? President Obama and
Congress were able to make some early progress
by passing the American Recovery Act in 2009.
But the task was too big for a single piece of
legislation. So, the President recently announced
the second part of his program to get Americans
back to work. To understand how it would help,
first consider some basic economic principles.
DEMAND FOR GOODS. Start with the
principle that an economy’s engine is the public
demand for goods and services. When the demand
is strong, people have jobs and pay taxes. If it is
weak, unemployment and government budget
deficits take hold.
When Wall Street crashed in 2007 and the
floor dropped out of the housing market, many
Americans who worked in affected businesses lost
their jobs. This first wave of unemployed workers
Continued on page 3
Chained CPI is Recipe For
Lower COLAs
Chapters (from page 1)
T
The North Florida Sub-chapter convened in Jacksonville.
State Sen. Tony Hill (D) addressed the convention,
noting that seniors are facing an increasingly hostile
political environment that requires them to organize and
mobilize as never before. The delegates elected a slate
of officers, pictured here. In the front row, from left to
right, are Gladys Williams (secretary-treasurer); Jeanette
Bartley (president); Patricia Pearson (vice president);
and Luella McQueen (executive board). In the back row
are Rometa Porter (trustee); Jacqueline Harris (recording
secretary); and Betty Tolen (trustee).
Tallahassee was the site of the North West Florida Subchapter convention in September. State representatives
Michelle Rehwindel-Vasilinda (D) and Alan Williams (D)
attended and addressed a packed house on the challenges ahead for workers and retirees in the next session
of the Legislature. Pictured above are the officers elected
by the delegates. They are, left to right: David Jacobsen
(president); Mary White (secretary); Evelyn Rollins (treasurer); Fred Williams (executive board); Elouise Jefferson
(trustee); Dorothy “Dot” Taylor (executive board); and
Robert “Scopie” White (vice-president). Not pictured is
trustee Tom McPherson.
Minnesota
AFSCME retirees in Minnesota have started to build a
new statewide retiree chapter. An organizing committee
has been meeting since last spring to begin membership recruitment and to create a structure for the future
Minnesota Retirees United/AFSCME Retiree Chapter 5. The
committee (some of the members are pictured above) is
moving quickly to establish sub-chapters throughout the
state. They’re getting off to a fast start. In just a few
months, nearly 2,000 retirees have signed up as
founding members.
Hawaii UPW Chapter 646
United Public Workers Retiree Chapter 646 held its recent
biennial convention on Kauai. Carol Noland, Honolulu, was
elected president. Pictured above is Kauai Mayor Bernard
Carvalho, Jr., (center) presenting the chapter with a proclamation recognizing the members’ outstanding public
service to the people of Hawaii.
Continued on page 3
2
he New Year will bring Social Security
recipients their first cost of living adjustment (COLA) since 2009. Starting with
January checks, benefits will go up 3.6 percent.
TECHNICAL MEASURE. Annual COLAs were
added to the Social Security Act in the 1970s to
compensate for inflation, ensuring that benefits
maintain the same buying power from year to
year. They’re determined by the Bureau of Labor
Statistics’ Consumer Price Index (CPI), a technical inflation measure that has resulted in COLAs
every year but two: 2010 and 2011.
Unfortunately, as seniors celebrate the
reinstatement of their COLA, storm clouds are
brewing over at the Super Committee (see article
on page 1) and in Congress. Deficit hawks want
to change the formula for determining COLAs,
claiming the current one doesn’t reflect actual
buying patterns.
PERMANENT REDUCTION. They’re pushing to change the current CPI measurement to
one based on a “chained CPI.” Social Security
advocates say it will permanently reduce COLAs
for both current and future beneficiaries. In fact,
that’s exactly why the budget cutters like it so
much. It saves money.
Currently, the Bureau of Labor Statistics
(BLS) determines the COLA by looking at the
prices of a variety of consumer goods and comparing them to prices for the same items in the
previous year. Food is included, also heating oil,
cars, computers, clothing, rents and more. Annual
COLAs reflect overall price increases.
Using the chained-CPI formula, BLS would
determine the COLA in the same way, but would
account for an additional factor. It would assume
that when prices rise, consumers make different purchasing choices. If they buy cereal, for
example, they may substitute a smaller box for
a larger one, a store variety for a brand name, or
just stop buying cereal altogether. Advocates of
the chained CPI say that by ignoring all the types
of substitution, the current formula for the Social
Security COLA consistently over-compensates
seniors for the cost of living.
UNDERCOUNTS HEALTH CARE. Of course,
neither the chained CPI nor the current COLA formula truly compensates seniors for their biggest
expense — medical care — which is under-represented in both measures. If it was represented
accurately, BLS has determined that COLAs
actually would be higher. Furthermore, substitution doesn’t work for health care purchases.
If your doctor says you need a triple bypass, you
can’t substitute a double. And foregoing the surgery completely could result in death.
The Center for Economic and Policy Research
calculates that the chained CPI would reduce the
2012 COLA from 3.6 to 2.8 percent. According to
the Social Security Administration, small annual
COLA reductions like that would accumulate gradually, but would add up to a substantial 10 percent
benefit cut over 30 years. That means the oldest
seniors would be hurt most. n
Flood of New Attacks (from page 1)
Medicare fraud, the free cancer screenings and
the free annual check-ups. The Super Committee
could eliminate all these, as well as other new
benefits.
Also in line for substantial cuts is Medicaid,
the state/federal program that provides
basic health coverage for low-income
Americans. Medicaid
is important for
seniors too, because
it pays for more than
60 percent of all nursing home care in the
U.S. When seniors
become poor paying for nursing home care (not
unusual at $70,000 a year), Medicaid starts picking up the tab.
CUTS IN LONG TERM CARE. But what
happens if Medicaid’s funding is cut? What if
the rules are changed so fewer seniors can get
benefits? Many would be on the street, suffering
from a stroke or Alzheimer’s disease. It’s hard to
believe such cuts are possible, yet Medicaid is a
top target for deficit reduction.
Finally, there’s the biggest target of all:
Social Security. For two-thirds of seniors, Social
Security is more than half their income. For a
third, it’s more than 90 percent. With an average
benefit of only $14,000 a year, most of us need
every penny of the benefits we earned.
Social Security doesn’t add a dime to the
federal deficit. It’s self-supporting, financed by
payroll contributions. Furthermore, the trustees
say the system will be fully funded for at least
25 years, so there’s no need for drastic changes,
such as privatizing Social Security or raising
the full retirement age to 69 or 70.
Yet, some on the Super Committee are pushing for these and other radical changes. One
proposal would create a new formula for the cost
of living adjustment, permanently reducing
the COLA (see article above). Another would
change the basic benefit formula, so future retirees get lower checks. Also under consideration
is a means test that would deny full benefits to
higher-income seniors. A means test would break
the fundamental link between contributions paid
and benefits received, making Social Security
look more like welfare than an earned right.
SOCIAL SECURITY THREATS. Deficit
hawks like these ideas because the more Social
Security is cut, the more money it loans the federal treasury. According to the original 1935 law,
once Social Security pays all benefits each year,
any additional income must be invested in U.S.
treasury bonds. Social Security receives market
interest rates on the bonds, which are paid to
Social Security as needed. The bonds create a
reserve fund for Social Security that’s currently
worth more than $2.7 trillion!
With benefit cuts, Social Security wouldn’t
have to cash in its bonds for many years, pushing
the government’s repayment obligations far into
the future. That would satisfy the deficit hawks,
but hurt millions of current and future retirees.
It may be that by the time Thanksgiving rolls
around, the Super Committee will be history —
unable to reach agreement on the best ways
to trim the budget or raise the revenue that’s
needed to rebuild our economy. But one thing is
certain: threats to Medicare, Medicaid and Social
Security won’t go away. They will continue to be
targets for deficit reduction, as well as hot topics
for the 2012 elections.
If you agree that cutting retirement lifelines
is unfair to average Americans — especially when
millionaires and rich corporations aren’t paying
their fair share of taxes — let Congress know how
you feel. Call your U.S. representative and two U.S.
senators at 1-888-601-0133 (AFSCME’s tollfree number) and leave this message: “I urge you
to reject all cuts in Medicare, Medicaid and
Social Security because they will hurt average
Americans. Instead of risking our retirement
lifelines, tell corporations and the wealthy
that it’s time to pay their fair share.” n
Retirees
Played Big
Part in Ohio
Victory
Chapters (from page 2)
New York Chapter 82
On November 8, AFSCME had a
huge victory in Ohio when voters repealed SB 5, the state law
championed by Gov. John Kasich
(R) that would have eliminated
most of the collective bargaining
rights for public employees. The
entire labor movement united
to mobilize voters, resulting in
an overwhelming Election Day
rebuke for the Kasich law: 68
percent to 31 percent. Members
of AFSCME Retiree Chapter 1184
were a big part of the get-outthe-vote effort. They spoke to groups at Senior Centers, distributed thousands of leaflets with a
special message to seniors, staffed phone banks and drove voters to the polls. They also made a
financial contribution to the cause. When AFSCME Sec.-Treas. Lee Saunders addressed the Ohio
Council 8 convention and asked delegates for support, Chapter 1184 Treas. Howard Van Kleef
responded immediately with a retiree chapter pledge of $10,000. Van Kleef is shown here, making
his announcement to cheers from the working members.
Economy (from page 1)
had less money to spend and stopped buying
goods and services. As other businesses saw
fewer customers, many of them started layingoff their workers, who also cut back on their
spending, which caused other businesses to layoff workers and so on. To make matters worse,
when businesses lose customers they reduce
another form of spending: investment. Why would
a company invest in greater output (requiring
the hiring of more workers) if it can’t sell the
inventory it already has?
Also, when people lose their jobs, they
obviously no longer pay taxes on wages. That
means less money for federal, state and local
governments. As government revenues plunge,
deficits grow. In response, states and localities try
to cut services and lay-off workers to help balance
their budgets. The result is more people who pay
less in taxes and spend less in their communities.
FEDS ARE LAST RESORT. Another proven
principle of modern economics is that when
workers stop spending and businesses stop
investing, the federal government becomes the
last resort for stimulating the economy. Pres.
Franklin Roosevelt recognized this when he
offered the New Deal, and President Obama
understood it when he signed the American
Recovery Act (ARA). In fact, without the ARA,
most economists think the nation would have
gone into another Great Depression.
The ARA included several elements designed
to stimulate the economy with more spending.
It cut taxes for working families so they’d have
more money to spend in their communities.
It aided families that were suffering from job
loss by extending unemployment benefits. It
gave federal aid to hard-pressed state and local
governments to prevent large-scale layoffs and to
fund construction projects. It also loaned federal
funds to the nation’s devastated auto companies,
which kept tens of thousands working all over
the country. These loans led directly to the auto
industry’s current recovery, ensuring that the
U.S. would maintain a critical component of our
manufacturing base.
FAILURES OF THE PAST. Today,
unemployment is no longer rising at a rapid rate,
but it remains much too high. Some say that all
will be well if we just cut taxes for the rich and
end government regulations for business and
Wall Street. But that was America’s economic
New York Retiree Chapter 82 held its annual convention in
May at Lake George. While enjoying the beautiful scenery,
the retirees heard from Jack McPadden, representing the
Office of the State Comptroller and the state employees
retirement system. He described the health of the pension
plan and conducted a lively question and answer session. A representative from the national AFSCME Retirees
staff also attended, providing an update on congressional
action in Washington, DC. In addition, delegates elected
a slate of officers, pictured here, from left to right: Gary
Tavormina (president); Charles Krom (vice-president);
Patricia Krom (secretary); David Williams (treasurer);
Harold Ryan and George Knab (trustees).
policy from 2000 to 2007. If those policies had
Maryland Chapter 1
worked, there would be no Great Recession.
So it’s amazing that some of the very same
people who, in the last decade, cut taxes for the
rich, de-regulated Wall Street and increased
federal deficits, are now calling for massive cuts
in the federal budget, including cuts in programs
that help state and local governments. With
unemployment already too high, and consumers
and businesses not spending enough to boost
economic growth, cutting government spending
now will throw even more people out of work.
SPUR HIRING. President Obama’s plan
is designed to do two important things: spur
hiring and stop layoffs. It calls for upgrading
and repairing America’s highways, schools and
At a recent general membership meeting in Baltimore,
bridges (collectively known as “infrastructure”);
Maryland Chapter 1 presented its 2011 Legislator of the
creating incentives for businesses to hire
Year Award to Del. Peter Hammen (D-46, pictured left).
workers; providing aid for state and local
Hammen, chairman of the House Health and Government
Affairs Committee, led the effort to defeat the governor’s
governments; and extending tax breaks for
proposal to dramatically increase retirees’ out-of-pocket
working families, but closing tax loopholes for the
costs under the state health insurance plan. “Delegate
wealthy and for corporations that don’t pay their
Hammen took action immediately, recognizing that
fair share. Obama also wants to extend benefits
our average pension check is only $940 a month,” said
for unemployment workers, so their families can
Chapter 1 Pres. Ida Ward (center). The photo above shows
count on basic spending money that will help fuel
Hammen receiving the award from Ward. Also pictured are
their local economies.
Patrick Moran (second from right), state employee organizing committee director, and International Vice Pres.
The President’s plan is moving us in the
Glenard Middleton who also serves as president of AFSCME
right direction,” said AFSCME Sec.-Treas. Lee
Council 67 (far right).
Saunders. “Funds to upgrade our infrastructure
mean people will
be hired to perform
needed work. Aid to
states and localities will
prevent more layoffs.
Free Medicare Benefits Draw Crowds
“Sometimes you
have to spend money to
In October, the U.S. government’s Centers for Medicare and Medicaid Services
announced that 20.5 million Medicare beneficiaries have already taken advanmake money and that’s
tage of Medicare’s free annual checkups and other free preventive services
exactly where we are
this year. Another 1.8 million (through August) have received drug discounts in
today,” he said. “The
the Medicare Part D “donut hole.” The average discount has been $530 for each
President knows that
beneficiary in the donut hole, for a total savings of more than $1 billion. The
the federal government
drug discount and the free preventive health services are all Medicare improveneeds to get in the
ments that were enacted in 2010 as part of President Obama’s Affordable Care
driver’s seat and step
Act (ACA).
on the gas. Right
Another positive result of the ACA is that the cost of Medicare Part B is grownow, it’s the only way
ing much more slowly than originally projected. Beneficiaries’ 2012 Part B
premium will be $99.90 per month, an increase of only $3.50 over 2011 rates
to re-start America’s
for most seniors (those seniors who paid $115.40 this year will actually see
economic engine.” n
their premiums decrease by $15.50). According to Jon Blum, director of the
Center for Medicare, the ACA helped restrain Part B costs by reducing overpayments to private Medicare Advantage plans, reforming the reimbursement system
for providers of durable medical equipment and facilitating changes in other
provider practices.
ConsumerTIME
3
McEntee Honored
by Retirees’ Alliance
In September, AFSCME President Gerald W. McEntee
received the Leadership Award from the Alliance for
Retired Americans (ARA). The award — ARA’s highest honor — was presented at the Alliance Legislative
Conference in Washington, DC. Nearly 700 retirees
attended the awards banquet, including 150 AFSCME
retirees from around the country, and watched a tribute
video profiling McEntee as a pioneer in union-retiree
organizing and a key figure in defeating the 2005
effort by George W. Bush to privatize Social Security.
President McEntee is shown above receiving the award
from ARA President Barbara Easterling.
Seniors Can’t Afford
Higher Co-pays
S
ometimes when congressional budget cutters talk
about reducing Medicare benefits in the name of deficit reduction, they claim that seniors use too many
covered services. The reason for this, they say, is that copays and deductibles are too low. They say if seniors had
to pay more out of pocket, they might make fewer unnecessary doctor visits and save Medicare a lot of money.
But a study led by Brown University researchers and
published last year in the New England Journal of Medicine
found that shifting costs to seniors might not save much
for Medicare in the long run. It analyzed Medicare managed care plans after they raised co-pays for doctor visits.
For every 100 people enrolled in these plans, the study
found that there were 20 fewer doctor visits in the course
of the year, but also two additional hospital admissions
and 13 more days spent in hospitals when compared with
plans that did not raise co-pays. The results imply that
higher costs may discourage seniors from getting care
they need, leading to serious health conditions and more
expensive treatment.
While some members of Congress may believe seniors
can afford higher costs, the truth is that half of
all Medicare beneficiaries have incomes below
$22,000 a year and already pay a sizeable portion
on health care.
The Medicare Rights Center did the math and
came up with an annual outlay of $5,071.76 for
an average senior participating in traditional Medicare
in 2011. This included a Medicare Part B premium of
$115.40 per month; another $249.50 per month for a
Medigap plan that fills-in coverage gaps; $31.08 per
month for a Part D prescription drug plan and $320.00
a year for the Part D deductible. n
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