AARP urges US entitlement reform on broad issues, not deficit

Tue Jan 15, 2013 3:40pm EST

* Entitlement reform focus on health costs, retirement security

* Programs seen as supports for a strained middle class

By David Morgan

WASHINGTON, Jan 15 (Reuters) - AARP, the powerful lobbying group for older Americans, urged political leaders on Tuesday to pursue so-called entitlement reform as part of a wide-ranging discussion about healthcare costs and retirement security rather than as a narrower deal on deficit reduction.

Laying out their agenda in the run-up to an intensive new fiscal debate on Capitol Hill, AARP executives portrayed the leading U.S. social spending programs - Social Security, Medicare and Medicaid - as necessary supports for what the group described as a declining middle class.

"We do need to make adjustments to Medicare and Social Security and Medicaid, and AARP members realize that. But we need to do so without compromising the health and retirement security of the American people," AARP Chief Executive Barry Rand said in a speech.

"The first thing we have to do is to broaden the current debate in Washington from the narrow lenses of deficit reduction," he added. "We need a full-blown discussion."

Washington is heading toward a new showdown over the federal debt ceiling, with Republicans demanding deep spending cuts.

Against that setting Rand promised a determined campaign to protect the popular social programs. But he also appeared to have few illusions about the prospects of avoiding cutbacks as part of a deficit-reduction deal.

"Congress controls what they want to do," Rand told reporters after his speech.

The group, which has taken a harder line on Social Security and Medicare reform over the past year, is also working to win wider acceptance of President Barack Obama's healthcare reform law. Many states have rejected plans to establish new online health insurance marketplaces as part of the reforms, and are also resisting calls to expand the national Medicaid program for the poor, which pays for nursing home care among other things.

AARP, which has 37 million members aged 50 and older, issued its call for a wider entitlement debate amid expectations that Obama could turn upcoming deficit talks about the Medicare program into a broader debate about rising healthcare costs.

The group also said that any changes in Social Security should be focused on helping Americans obtain a more secure retirement with benefits adjusted for inflation and continued coverage for the disabled.

It endorsed a healthcare strategy that would lower prescription drug prices, boost transparency on the cost and quality of medical services, implement policies to promote high-value integrated medical care.

AARP also reiterated its staunch opposition to two proposals that have emerged in deficit talks: raising the enrollment age for Medicare to 67 from 65, and retooling Social Security cost-of-living adjustments to a slower-growing inflation measure known as chained-CPI.

Medicare, Social Security and Medicaid have become deficit reduction targets because underlying trends, primarily an aging population top-heavy with retirees, and rising healthcare costs, which together threaten to produce a massive drain on the federal budget in years to come.

Spending on the three programs is forecast to nearly double over the next decade, from a combined $1.6 trillion today to $3 trillion in 2022, according to the nonpartisan Congressional Budget Office.

But AARP officials said the decline of the American middle class since the Great Recession is likely to make those programs more vital to the economic security of workers hit by high healthcare costs, job losses, declining incomes and dwindling savings that have made retirement an elusive option for many.