Social Security will remain solvent for baby boomers
Nationally-known public health activist Ruth Roemer, a professor emerita at UCLA’s School of Public Health, addressed a mixed-aged crowd of residents Wednesday at the regular meeting of the city’s Commission on Older Americans, where proposed Medicare and Social Security reforms topped the discussion.
Roemer and several residents at the meeting said they were concerned with the delays in adding a prescription drug plan to Medicare and the proposals for privatizing Social Security.
“Medicare is under attack by the Bush Administration,” the professor said. “Medicare hasn’t failed the federal government, the federal government has failed Medicare.”
The speech covered the changing nature of prescription medicines and how they are now being advertised straight to the public instead of exclusively to doctors. Roemer said the change has had both good and bad implications for seniors.
“Patients are increasingly making informed decisions about their medications along with their doctors, showing they are very knowledgeable about what’s out there,” Roemer said. “But drug costs have also risen significantly.”
In 2001, pharmaceutical companies spent 16 percent of their total budget on advertising their products directly to consumers, but during that same year prescription costs increased by 17 percent, Roemer said.
“So it would at least seem like there is a correlation between the increased spending and rising drug costs,” she said.
Roemer reviewed federal proposals for adding a prescription drug plan to Medicare and said she believed it would be only a matter of time before Republicans and Democrats agree on a plan.
“I think the handwriting is on the wall and... there are signs that something may pass soon,” Roemer said. “I think while all these Congress people are home during the summer they will get pressured to pass something.”
But Roemer also noted that the pharmaceutical industry employs more lobbyists in Washington than there are members of Congress.
“The question is whether it will be a good system or if we will have to fight for more,” she said.
Last month a plan to add a prescription drug plan to Medicare was knocked down because Republicans and Democrats could not agree on who would administer such a plan. Democrats advocated for Medicare to control the plan, and Republicans wanted it in the hands of private insurance companies.
But Roemer said Medicare has been able to keep its administrative costs between 3-5 percent annually, while private insurance companies have administrative costs between 12-15 percent.
“That should be proof enough that Medicare can handle administering a national system like this proposal and within budget,” Roemer said.
Roemer also said talk of Social Security becoming insolvent in 15 years is a myth. She said as the baby boomer generation, or those born between 1948 and 1965, begin to retire they will draw heavily on the federal retirement system.
Studies suggest that an increasing retirement age, along with higher salaries by younger workers and interest from Social Security’s bonds, will pay for 70 percent of the deficit created by the baby boomers retiring, Roemer said.
She also noted that Social Security can be “saved” by increasing payroll taxes collected for SSI by 1.2 percent from the current rate of 6.2 percent to roughly 7.3 percent.
And a lot of the remaining deficit can be saved by keeping the federal government from using Social Security for covering budget gaps.
“It’s not been a trust fund for retirement,” she said. “It’s really been a cookie jar for the government to reach into when they need money.”
Originally published in the Santa Monica Daily Press print edition on August 22, 2002. Read the original PDF.