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Inauguration Day: Obama and Older Americans

As the president begins his new term, big changes could be ahead for Social Security and Medicare

By Bob Rosenblatt | March 24, 2014
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Bob Rosenblatt is a writer and editor specializing in aging issues. His blog, Helpwithaging.com, focuses on the finances of aging.

Now that President Barack Obama is beginning his second term, many older voters are wondering what the effect will be on Social Security, Medicare and Medicaid.

Obama faces serious challenges on potential changes to federal retirement and health programs from liberals in his own party and other supporters who had stifled their criticisms while hoping for his re-election.

Sen. Majority Leader Harry Reid (D-Nev.) had told reporters in a post-election news conference: “We are not going to mess with Social Security.” But the reality may be different.

It's true that in his inaugural address, Obama gave a strong endorsement of the programs that are the foundations of the social safety net.

"The commitments we make to each other -- through Medicare and Medicaid and Social Security -- these things do not sap our initiative, they strengthen us," Obama said. "They do not make us a nation of takers. They free us to take the risks that make this country great."

(MORE: The New Financial Outlook for Social Security and Medicare)

Singling out those programs by name may provide some reassurance to members of the liberal wing of Obama's party, but they still worry about a political struggle ahead. “There is going to be the fight of our lifetime to maintain Social Security, Medicare and Medicaid,” says Eric Kingson, co-chairman of Social Security Works, a liberal lobbying group.
 
Major Changes May Be Coming

Look for serious talk in Washington in which the president and Democrats would accept changes to Social Security and Medicare as part of the next stage in addressing the fiscal cliff.
 
The specifics of such a deal are unknown, but Obama reportedly offered to increase the Medicare age to 67 in last year’s budget discussions with Republicans. And, as Next Avenue has noted, there has been growing talk about recalculating annual Social Security Cost of Living Adjustments in a way that would effectively reduce yearly increases in that benefit, known as the "chained CPI."
 
Significant changes to Social Security and Medicare are anathema to many senior advocates. They would mean “these programs are going to be in great jeopardy,” says Kingson, who is also a professor of social work at Syracuse University.
 
The debate in Washington for the last two years has been “about the federal budget and hasn’t been much about the impact of changes on health and retirement security,” says David Certner, legislative policy director for AARP, the politically potent lobby for people 50 and older. “What has been missing from this equation has been the focus on people.”
 
But Social Security, Certner says, has "its own funding source and is not part of the federal budget and should not be dragged into the budget debate.”

The Obama-Nixon Parallel

When it comes to changing Social Security and Medicare, Kingson sees Obama as a potential Democratic version of President Richard Nixon going to China. Just as only a Republican president could open relations with China without being accused of being soft on Communism, he says, only a Democratic president could cut programs that were the basis of Democratic electoral success.

Some conservatives say Congress and the president need to strike a compromise. “It’s time now to move beyond slogans and move into specific discussions about what we do about Social Security,” said David John, a retirement and Social Security expert with the conservative Heritage Foundation.

(MORE: Will You Have to Wait Past 65 to Get Medicare?)

Key Parts of Obamacare Ahead

Regardless of the negotiations, the re-election of the president means that key provisions of Obamacare affecting the health of Americans 50 and older will remain locked in place:
  • Beneficiaries with Medicare Part D drug coverage will continue receiving a 50 percent discount on brand-name prescription drugs and a 14 percent discount on generics once they have reached the “doughnut hole,” spending between $2,930 and $4,700 on prescription medications.
  • Medicare will continue offering its new, expanded list of preventive care services and treatments.
  • The federal government will establish a basic package of health insurance benefits for policies sold through insurance exchanges beginning in 2014.
  • Private insurers will not be allowed to turn away prospective policyholders due to pre-existing medical conditions.  
Beginning in 2014, states will be given the opportunity to expand Medicaid coverage to millions of poor people who are currently ineligible for the federal health program. Among the beneficiaries would be large numbers of people in their 50s, working at low-wage jobs without health insurance.
 
“All these important things now have a chance to go forward,” says Bob Blancato, a consultant on aging issues.
 
He is also optimistic that Congress will provide financing for additional ombudsmen to oversee the quality of care in nursing homes.
 
Now that Obama's second term is beginning, the serious work lies ahead.