November 11, 1971
Page 40694
SOCIAL SECURITY REFORMS
Mr. MUSKIE. Mr. President, low income in retirement continues to be the number one problem confronting 20 million older Americans
Today 4.7 million persons 65 and older fall below the poverty line, nearly 100,000 more than in 1968. More than 2 million older Americans are on welfare. And 60 percent of all elderly persons living alone are classified as poor or marginally poor.
In March, a badly needed 10-percent increase in social security benefits was approved, bringing some relief to 27 million recipients. But even with the 10-percent raise, social security benefits for the typical retired worker still fail about $300 below the poverty threshold of $1,852.
The net impact of these statistics is that older Americans are more than twice as likely to be poor as younger Americans Today 1 out of every 4 persons 65 and older – in contrast to 1 in 9 for younger individuals – lives in poverty.
But these statistics, depressing as they are, can never express in human terms what it means to live in deprivation. They can never capture the frustrations of an elderly person who did not become poor until he became old. And statistics can never convey the daily critical decisions which they must make – whether they should buy food for the table or medicine to maintain their health.
However, these statistics clearly underscore the need for major reforms in our social security program. They also demonstrate that piecemeal, stop-gap proposals are just not going to solve the retirement income crisis now affecting millions of older Americans, and threatening to engulf many more nearing retirement age. The Senate Special Committee on Aging – of which I am a member – has conclusively made the point, in its report on the "Economics of Aging," that a retirement income crisis exists, and that it is deepening. It is high time that we heed that warning.
Quite clearly, comprehensive reforms in social security are essential if the elderly are to share in the abundance, which they have worked most of their lives to create. And the House-passed social security-welfare reform proposal, H.R. 1, provides a foundation for making many of these changes. Several provisions in this measure – such as cost-of-living adjustments; full benefits for widows at age 65; a liberalization of the retirement test; significant increases in minimum monthly benefits; an age-62 computation point for men; and others – are identical or similar to proposals I have advanced.
But, today's retirement income problems cannot be solved by adding a few dollars every 2 years to the elderly's social security payments. Immediate, imaginative and far-reaching action is needed on a number of fronts to modernize social security and medicare.
HIGHER AND EARLIER BENEFIT INCREASE
The proposed 5-percent increase in the House bill, though welcome, is simply not enough for coming to grips with the retirement income problems of the aged. Moreover, the effective date for this raise is next June.
Quite clearly, a more sizable increase is essential if the elderly are to stay ahead in their desperate race with inflation. And with poverty on the rise for older Americans, a more substantial increase, I believe, is urgently needed this coming January.
For these reasons, I am proposing as I did in S. 1645 – a bill which I cosponsored with the chairman of the Senate Committee on Aging, Mr. CHURCH – across-the-board benefit increases for all social security recipients. Under this measure, the social security raise would average nearly 15 percent. But it would be weighted to provide higher percentage increases for persons who need them the most – individuals with low lifetime earnings between $150 and $200 would be entitled to an increase which would average about 21-percent under my proposal. Workers with creditable monthly earning from $200 to $300 would receive approximately an 18-percent increase.
The advantages of this approach, I believe, are compelling. First, it recognizes that persons who receive low social security benefits are less likely to have other supplementary resources than higher income beneficiaries. Equally important, this measure can enable large numbers of older persons to move out of poverty without the necessity of resorting to welfare.
In terms of dollars and cents, this approach will provide an additional $130 more per year, on the average, for social security recipients than is authorized under H.R. 1.
GENERAL REVENUE FINANCING
Another major area for reform is provision for well timed and well-conceived use of general revenues. Our present method of relying almost entirely upon payroll taxes leaves much to be desired. It places a regressive burden on today's workers because the existing tax is uniformly applied to all covered wages. As a consequence, individuals with lower wages pay a proportionately larger tax on their earnings than do higher paid persons.
A few weeks ago I introduced legislation to make the existing payroll tax more progressive and to provide greater tax relief for lower- and middle-income persons. Under this proposal, 63 million workers would pay lower taxes than they would under H.R. 1.
But steps must be initiated now to insure the future growth of our social security program. And general revenue financing can help make this goal a reality. It can also help assure that the elderly will share in our abundance and in the growth of our economy.
MEDICARE
Important as adequate social security benefits are for the elderly, we must still not overlook the drains upon their limited pocketbooks. Today a major threat to the economic security of the aged is the high cost of illness, despite the valuable protection provided by medicare.
For persons 65 and older, annual health care expenditures now average about $791 – three times that for a person in the 19 to 64 age category and six times that for a youth. Older Americans now account for 27 percent of all medical expenses in the United States, although they comprise only 10 percent of our total population.
Unfortunately gaps still exist in medicare coverage. For example, medicare now covers only about 43 percent of the elderly's health care expenditures.
PRESCRIPTION DRUGS
One major gap in coverage is out-of-hospital prescription drugs. For older Americans, prescriptions average about three times as high as for younger persons. And they are six times as great for elderly individuals with severe chronic conditions, about 15 percent of all persons 65 and older.
In fact, out-of-hospital prescription drugs represent their largest personal health care cost which they must meet almost exclusively from their own resources. This cost alone accounts for approximately 20 percent of their out-of-pocket health care expenditures.
Several distinguished panels have already recommended that medicare be broadened to include this very essential expenditure for the elderly. Most recently, the 1971 Social Security Advisory Council proposed that this measure become law. For these reasons, I again urge the Senate to extend medicare coverage to include out-of-hospital prescription drugs.
The need for this coverage was also demonstrated at a recent hearing in Los Angeles before the Subcommittee on Health of the Elderly, of which I am chairman. For example, Mrs. Agnes Brewster, who is a health economist, pointed out that out-of-pocket medical payments can make a serious dent in the typical pension for a retired worker. She also added–
An unavoidable reason for the aged spending so much themselves relates to drugs, which averaged over $70 of private costs to the aged, and would be more if all who need prescribed drugs could afford to purchase them.
PART B PREMIUM
Another major out-of-pocket cost for the elderly is the $5.60 monthly premium charge for part B supplementary medical insurance. On an annual basis this amounts to $67.20 for a single person and $134.40 for an elderly couple. Moreover, this constitutes a significant expenditure for the vast majority of older Americans living on limited, fixed incomes.
Under my proposal, this premium charge would be eliminated for the elderly. Instead, this cost would be financed partially out of general revenues.
For the typical retired worker, this measure would be almost equivalent to a 5-percent boost in benefits. It would also help assure that protection under part B would be automatically available for all eligible individuals. Under existing practice, the $5.60 monthly premium charge is automatically deducted from the monthly social security check for persons who elect coverage under part B of medicare. The Social Security Advisory Council also has supported the adoption of this proposal.
NEED FOR A GENUINE NATIONAL COMMITMENT
Despite the magnitude of the retirement income problems of the aged, our Nation still lacks a genuine national commitment for dealing with this crisis. But in this year – the year of the White House Conference on Aging – it is absolutely essential to produce this commitment if we are to develop a long-awaited national policy on aging.
The enactment of these proposals, I strongly believe, can be a major step forward in advancing toward this goal.