WASHINGTON — The nation’s most prominent lobbying group for seniors is backing the 2016 federal budget deal reached in Congress.
In a letter to Congress praising the deal, AARP’s chief executive officer, Jo Ann Jenkins, wrote, “Your efforts to reach across the aisle and together find sensible solutions to significant problems are appreciated and commended.”
According to the White House, the budget agreement includes $80 billion in sequester cap relief over the next two years, plus $31 billion in additional funding.
The agreement is front-loaded, with $50 billion of that sequester cap relief and roughly $16 billion of additional funding coming this fiscal year, constituting nearly 90% of the discretionary sequester relief for 2016 proposed in the president’s budget.
The sequester relief is paid for over 10 years by a mix of spending reforms, stronger tax compliance measures for large partnerships like hedge funds and private equity firms, and other measures.
In addition, the bill would provide up-front premium relief in Medicare Part B paid for over several years, avoiding a sharp increase in Part B premiums.
One of the most significant, as well as most expensive, parts of the deal — which avoids a government shutdown — prevents a 52% jump in premiums that would have impacted some 8 million Medicare Part B enrollees in the coming year. Had Congress failed to reach a deal, that 52% increase would have translated to roughly $159 per month in premiums from the estimated $105 they are now.
Pending approval by Congress, the budget deal will result in a less drastic rise in Medicare premiums — to about $120 for 30% of beneficiaries — and the annual Medicare deductible, which is now $147, would rise to roughly $167 — substantially less than the $223 premiums were likely to reach without the deal.
However, there will be no increase for most, 70%, of Medicare recipients, due to a federal provision linking Medicare premiums to Social Security benefits.
The expected shortfall in Medicare due to most beneficiaries not experiencing a jump in premiums will be compensated by an infusion of cash into Medicare Part B by the Treasury. This government-injected revenue will cover the costs of health care expenses incurred by Medicare recipients. In turn, Medicare beneficiaries will pay back the Treasury through slight increases in monthly premiums over the next several years.
AARP also said it supports the deal because of other provisions, such as the budget preventing a 20% across-the-board cut in Social Security disability benefits for 11 million people next year.
Additonally, AARP supports a measure in the budget to make some changes initiated by Republicans to Medicare and disability, such as the creation of a new investigative unit to go after fraud and increased penalties on those who commit it — as well making it tougher for new recipients of Social Security to enroll, requiring not just one, but two doctors, to confirm that the individual applying for disability is actually disabled.
According to former House Speaker John Boehner, the budget agreement represents the “first significant reform to Social Security since 1983 and would result in $168 billion in long-term savings.”