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| Bad Medicare policy leaves younger workers shouldering the benefit burden How the Bush Medicare law affects younger workers Summer 2004 It's easy for younger workers to think of the new Bush Medicare law as an issue only impacting retirees. Think again. Workers need only look at their paycheck stub to understand the importance of reversing the new Medicare law and strengthening the tradition program. Before the Bush Medicare law, every worker was guaranteed Medicare's comprehensive health care benefits upon retirement. President Bush's new Medicare law eliminates guaranteed health care benefits. Yet workers are forced to a pay 1.4% payroll tax for a Medicare program for which they may not be eligible. And as health care costs escalate, the amount workers pay in income payroll taxes will continue to rise. The new Bush Medicare law: from a bird in the hand to a hand full of feathers Before the Bush Medicare law, the Medicare system was considered a "defined-benefit" similar to a defined pension plan. Workers qualified for Medicare by working 10 years or the equivalent of 40 quarters, entitling them to a basic, guaranteed health care benefit in retirement. President Bush's new Medicare law wipes out this guaranteed health care benefit, scaling worker's benefits on retirement income and personal health care investment contributions. The new Bush Medicare system is now the equivalent of a 401K-type plan. Privatizing Social Security, also considered a defined-benefit, is next on President Bush's hit list. The president is proposing putting future program benefits in the hands of Wall Street – effectively wiping out Social Security's guaranteed benefits. Bad Medicare policy leaves younger workers shouldering the benefit burden Essential economic and health care services are shifting from employers to the pockets of the workers. There is a dangerous trend of employers diluting pension enhancements, threatening to create new pension tiers for younger workers while they must pay costs out-of-pocket for their retirement and health care. For private employers the "on-your-own" attitude is particularly true toward younger workers. Hospitals often require workers pay for health care through defined-contribution, such as 403Bs or Health Savings Account plans. These changes all come at a time when health care costs – particularly cost of prescription drugs – are escalating at several times the rate of the inflation. This leaves the benefits burden squarely on the shoulders of younger workers – making it harder and harder for them to save for future retirement and health care needs – thereby condemning them to poorer benefits package when they retire. For today's young NYSUT workers, Medicare's guaranteed defined benefit becomes even more important. Twenty-year-old workers:
3-in-10 will suffer a disability before they retire School-related and health care professionals and workers performing repetitive stress work face even greater risks of succumbing to disability during the course of their careers. The traditional Medicare system also provides a link to Social Security disability benefits for younger, in-service workers. Once a worker qualifies for Medicare benefits, they also qualify for Social Security disability benefits. This guarantees health care coverage to non-retired workers suffering from profound illness. Social Security disability benefits also grow with the annual costs-of-living rate – a fact particularly important to younger workers who haven't accumulated sufficient private savings incase they became disabled. By undermining Medicare's guaranteed benefit package, the Bush law threatens Medicare's link to Social Security disability benefits for younger workers. Today's younger workers need Medicare's guaranteed health care benefits every bit as much as retirees The combination of Medicare and Social Security disability benefits is significant for younger, in-service NYSUT members. These benefits replace up to 65 percent of the earnings of the average 25-year-old wage-worker with a very young child if he or she becomes disabled. Medicare and Social Security disability benefits are payable throughout the workers career, until the worker reaches retirement age, when Social Security's retired worker benefits kick in. The Medicare/Social Security disability benefits are like having the equivalent of a $220,000 disability insurance policy. Most workers could not afford such a disability policy if they had to purchase it through a private insurer. Medicare enables your parents and grandparents to live independently in retirement. Medicare's traditional guaranteed benefit program and Social Security's guaranteed benefits ensures elder relatives can maintain a decent standard of independent living. Before Medicare and Social Security, many retirees had little choice but to live with younger family members to survive financially. President Bush's partial privatization of Medicare's traditional benefits and proposals to privatize the Social Security system threatens push our progress back a half century. Take Action! Visit politicalaction.nysut.org and send a prewritten letter to you U.S. Representatives about changing the sham Bush Medicare law. |
The Bush Medicare law affects you even if you are decades away from retirement because:
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