HHS Budget FY 2022

WM:  President's Proposed Fiscal Year 2022 Budget with the Department of Health and Human Services Secretary Becerra  June 8, 2021

Finance:The President’s FY 2022 HHS Budget, June 10, 2021

So far, the Administration has not yet addressed changes to the Affordable Care Act, at least not publicly. We suggest that the Committee ask the Secretary about any such plans.

At minimum, the individual and employer mandates, with associated penalties,  that were repealed must be restored.

The President campaigned on restoring and perfecting the Act, adding a public option. We agree, although the public option need not be self supporting. It must be subsidized through a broad based consumption tax. Such a tax burdens both capital and wage income. 

The current funding stream seems to have been designed to draw opposition from wealthier taxpayers. It is an open secret that the Minority does not oppose most of the Affordable Care Act (which was designed by their own Heritage Foundation as an alternative to Mrs. Clinton’s proposals).  Broaden the tax base to fund the program and the nonsense on repeal will end.

The current funding stream from student loan initiation and interest, which was included in the baseline, should also be ended. Graduates (and non-graduates) with student loan debt cannot afford both their loan payments and insurance payments under the Affordable Care Act. When they apply for lower loan payments, which are always granted, they face either a balloon interest payment or capitalized interest, which makes their funding situation worse. No one should have to retire with student load debt, yet quite a few soon will (or already have). 

Forgive capitalized interest and apply any overpayments to principal. There should not be a one-size-fits-all subsidy. Also, when payments are deferred, return to the practice of deferring interest (or allow debts to be discharged, at least partially, in bankruptcy).

The following analysis comes from the Single Payer attachment that has previously been provided. Because of the President’s preference for establishing the public option, we will repeat those analyses here. Aside from a broader base of funding, other compromises are necessary to enact a public option.

To set up a public option end protections for pre-existing conditions and mandates. The public option would then cover all families who are rejected for either pre-existing conditions or the inability to pay. In essence, this is an expansion of Medicaid to everyone with a pre-existing condition. As such, it would be funded through increased taxation, which will be addressed below. A variation is the expansion of the Uniformed Public Health Service to treat such individuals and their families. 

The public option is inherently unstable over the long term. The profit motive will ultimately make the exclusion pool grow until private insurance would no longer be justified, leading again to Single Payer if the race to cut customers leads to no one left in private insurance who is actually sick. This eventually becomes Medicare for All, but with easier passage and sudden adoption as private health plans are either banned or become bankrupt. Single-payer would then be what occurs when insurance companies are bailed out in bankruptcy, the public option covers everyone and insurance companies are limited to administering the government program on a state by state basis.

The financing of the Affordable Care Act should be broadened. It should neither be funded by the wealthy or by loan sharking student loan debtors. Instead, it should be funded by an employer-paid consumption tax, with partial offsets to tax payments for employer provided insurance and taxes actually collected funding a Public Option (which should also replace Medicaid for non-retirees). Medicaid for retirees and Medicare should be funded by a border adjustable goods and services tax, which should be broad based.

Why the difference? The goal is to not need a public option as employers do the right thing and cover every worker or potential worker. Using an employer based tax is an incentive to maximize employee coverage. Medicare, however, is an obligation on society as a whole.

Our comments on Social Security administrative and capital costs originated in our testimony to the Appropriations Subcommittee.

I submitted our testimony as an SSDI beneficiary, as well as for retirees. Even before the pandemic, my SSDI was inadequate for food, medicine, clothing and cable. If I owned a vehicle, there is no way I could maintain it or even buy gas. I have an above average benefit, high enough to be ineligible for SNAP or Medicaid. Many are not so lucky, even on a good day. 

In the last few months, days have not been so good. Were it not for stimulus payments, I would be running out of food as I write this and would not have just bought new clothes, from socks and underwear to a jacket I can wear when the Committee finally asks me to testify in person. As it is, I will need to use the last $600 from my December payment (which should have come through Social Security) to attend my upcoming high school reunion. Whale I have wifi, I cannot afford cable and a car is still out of reach.

Let me underline a point. In most months, new underwear is not an option, I rely on free bus rides due to the pandemic and subsidies from Ride On and there is never enough money in that last week before the check comes. When it does arrive, the cupboard is bare.

Food prices are skyrocketing. Part of the problem may be too much money chasing too few goods, but retirees and the disabled find (our)selves between a rock and a hard place. We need a COLA and we need it now. Most of us cannot even afford cola. Because this is a short term emergency due to the Pandemic, it should be funded out of the general fund until the normal process kicks in for next year.

This brings us to the funding of Social Security administrative costs. They are low - the most efficient in retirement savings. However, they should not have any. This is especially the case responding to the pandemic. 

Use general revenues now to fund administration, improvements and more office space. As the pandemic wanes, caution will still be necessary for a while. It is time to build out some infrastructure in both government and leased space. The same is the case for Medicare and Disability Insurance costs.  

The general fund already owes trillions of dollars to the Social Security Trust Fund. Rather than trying to figure out how to extend the fund for a 75 year balance at the expense of future retirees, fund n0n-benefit costs immediately from the general fund.

State governments are under financial pressure as a result of the pandemic, especially in the area of healthcare costs, most especially for seniors in nursing homes who are “dual eligibles.” The heart of President Reagan’s New Federalism Proposal was the transfer of state Medicaid expenses to the federal government, largely to fund baby boomers who would become dual eligible with time. Time is now up, or will be shortly. 

Welfare has been reformed, allowing state and federal governments to save money - which was part of the New Federalism bargain that was not accepted at the time. We will address this part shortly, but the irony is that federal money was reduced without the second part of the trade-off. 

Finish the process and create Medicare Part E for low income disabled and retirees. This will put investigation of nursing home conditions into the federal sector. States have done a poor job in enforcement of health and safety standards. It is time to make this a national responsibility.

One way to increase benefits generally is to increase the minimum wage, the higher the better, and rebase current benefits to consider such an increase to be wage inflation. Such a change will fund itself, because wages funding benefits will be increased across the board.

For long term balance, any cuts must be avoided. Indeed, they are dead on arrival. In the long-term, as we have stated recently as well, debt will be a problem – but not within the next few years – as neither Europe nor China will enact the same kind of consolidated income tax, debt and monetary reserve system that allows us to be the world’s currency securitization provider. 

Debt reduction must not be an excuse to cut entitlements. As we state in our debt volume, Squaring and Setting Accounts: Who Really Owns the National Debt? Who Owes It? - December 2019, the debt assets owed to the bottom 40% are sacrosanct, as they paid for it with regressive payroll taxes while they were working or by having to shift from the Civil Service Retirement System to the Federal Employee Retirement System which required savings rather than a defined benefit. 

Forty years ago, the decision was made to advance-fund the retirement of the baby boomers, rather than immediately begin subsidies from the general fund. Doing so would have required repealing tax cuts for the rich enacted by President Reagan, the Senate and just enough conservative Democrats in the House to do damage.  

Now that the wealthy have to pay what they owe to the trust fund (or rather, the children of the wealthy of the 80s), people are talking about means-testing Social Security and were talking about making it attractive to upper classes by investing it. The latter nonsense died in 2008. The former would again make asset holders fix the debt liability of the top 10%. It would also rob the bottom two quintiles of their most effective voice – higher income taxpayers who do receive benefits. As long as they get them, the program is safe.