A path to poverty: Happy Mother's Day
By Jeffrey Lewis
April 27, 2011
Every woman regardless of age, ethnicity, race or marital status should ask themselves one question this Mother's Day: Why is the Republican plan to solve the nation's debt and deficit crisis going to push me closer to poverty in my older years?
Women, as the nation's caregivers, ought to turn the tables to collect on the economic value of their unpaid contributions - estimated at approximately $375 billion in 2007. Instead, the "Path to Prosperity" designed by Republican Congressman Paul Ryan and endorsed by House Republicans, will place an immense and disproportionate load on the already overburdened shoulders of millions of older women, providing instead "a path to poverty."
The cornerstone of the Ryan plan is ending the Medicare program as we know it. In the District of Columbia, 63 percent of Medicare recipients are women. Starting in 2022, Americans now under the age of 55 would not be eligible for Medicare as currently designed, but for a voucher equal in value to the average annual amount Medicare currently spends on a retiree's health care, to be applied toward the purchase of private insurance.
The sales pitch is that competition among private insurers will keep costs down and result in more choice - a concept that would be laughable if the consequences weren't so tragic.
Medicare administrative costs run about 5 percent. No private insurer can compete with those administrative costs. Even if the value of vouchers equaled projected Medicare spending, seniors would still face two bad options: paying more for same level of service, or accepting policies covering less. The Ryan plan is rationing by another name.
It gets worse: the value of the vouchers will increase at the overall inflation rate, while the cost of medical care increases much faster. So, every year, seniors would lose even more ground and older women would find themselves one step closer to impoverishment.
The Ryan plan abandons all pretense of cost control. According to the non-partisan Congressional Budget Office, the total cost of care for seniors under the Ryan plan would rise dramatically faster than under the current system - and costs borne by seniors themselves will explode.
Under the current plan, in 2022 (when the voucher system is slated to begin), it would cost an average of $14,770 in insurance and other expenses to provide full coverage to a 65-year-old with $6,150 paid out of pocket. Under the Ryan plan, costs of providing care would rise 36 percent, to $20,510. And expenses paid by seniors themselves, would more than double, to an estimated $12,510 a year.
That $6,000 a year difference would be a lot for anyone on a fixed income. But it would mean a devastating loss of lifestyle for those earning less. And lower-income retirees, who are disproportionately women, do not have extravagant lifestyle. Many simply are surviving.
The Ryan Plan would further stack the deck against retired women. If this Medicare plan becomes law, women will pay thousands of additional dollars a year for health care against retirement savings and Social Security payments that average dramatically lower than those received by men.
Largely because they accept greater responsibility for raising children and caring for aging parents, women are more than twice as likely as men to work part-time and much more likely to work in low-wage positions or to spend years outside the workforce. Even professional women in two-parent families are more likely to carry the greater domestic burden, working fulltime but choosing the "mommy track." And women who work as fulltime nonpaid caregivers for aging parents, disabled children, etc., lose approximately $650000 in lifetime wages and retirement benefits.
Social Security payments are based on 40 years of average earnings (with the lowest five years removed). This means that years working part-time or caring for family fulltime can result in significantly smaller Social Security checks, although Social Security comprises 51 percent of retired women's total income compared to 37 percent for men. In 2008, the average annual Social Security income received by women 65 years and older was $11,377, compared to $14,822 for men.
In recent years, women have made tremendous gains in income and opportunity. But at retirement time, women - especially those who've put their families ahead of careers - still come up short compared to men.
The added cost of the Ryan plan for Medicare vouchers will be a brutal, disproportionate rebuke for lifetime sacrifice and hard work. It will put the harshest burden of deficit reduction on those least able to bear it.
On this Mother's Day for millions of women looking forward to low or moderate retirement incomes, the "Path to Prosperity" is, in fact, a path to poverty.
Jeffrey Lewis is the president of the Heinz Family Philanthropies.