Prominent Health and Income Security Groups Raise Concerns About the Effects of Social Security, Medicare and Medicaid Cuts on Communities of Color

WASHINGTON – As the United States transitions to a “majority-minority” population over the next three decades, prominent health and income security groups say the Joint Select Committee on Deficit Reduction and other Members of Congress must take into account how changes to Social Security, Medicare and Medicaid will affect communities of color, a population that is growing and increasingly economically insecure.Two new reports show the importance of programs like Social Security, Medicare and Medicaid to communities of color. Plan for a New Future: The Impact of Social Security Reform on Communities of Color, released by the Commission to Modernize Social Security, argues that changes to the program must consider the impact on workers and families of color who are more vulnerable to economic instability and far less likely to have generational wealth than white families. The importance of Medicaid to the black and Latino communities, as well as the heavy burden of chronic disease borne by these groups, is documented in a detailed report, Medicaid: A Lifeline for Blacks and Latinos with Serious Health Care Needs, which was recently released by Families USA.

“By focusing on the needs of communities of color, these reports are particularly timely and important. Times of economic uncertainty show us even more clearly how important programs like Social Security, Medicare and Medicaid are to millions of Americans, especially those hit hardest by this recession,” said Max Richtman, president and CEO of the National Committee to Preserve Social Security and Medicare Foundation. “Rather than searching for ways to preserve and strengthen these programs, too many in Congress talk about them only as a way to pay down our debt. We should be looking for ways to modernize these programs, increasing the adequacy of benefits, in anticipation of demographic realities we can’t ignore rather than using the program as a bargaining chip in the current deficit reduction debate.”

Medicaid: A Lifeline for Blacks and Latinos with Serious Health Care Needs shows that because blacks and Latinos tend to have lower incomes than whites, they are more than twice as likely to rely on Medicaid for health coverage. In addition, Medicaid helps roughly half of all black and Latino children get a healthy start in life, and it helps black and Latino seniors and people with disabilities who need long-term care. The report also argues that making cuts to the Medicaid program doesn’t reduce medical costs; instead, it merely shifts those costs—to states, to families, to hospitals, and ultimately, to people with insurance. In some cases, the report notes, cutting assistance for treatment increases costs over the long run.

“There are critical disparities in the delivery of health care to black and Latino communities, which contribute to a higher incidence and greater severity of chronic and serious health conditions in those communities,” Ron Pollack, Executive Director of Families USA, said today. “That medical reality, combined with the fact that these communities tend to have lower incomes, means that Medicaid is a vital lifeline that protects the health and well-being of these Americans.”

Plan for a New Future cites U.S. Census Bureau data showing that a majority of babies born in this country are now from minority racial groups. If this trend continues, the overall U.S. population is expected to become “majority-minority” by 2042. It also reveals stark differences in how Social Security is used by whites and people of color. While the vast majority of whites (74%) depend on Social Security for the program’s’ retirement benefits, almost half (45%) of all African-American beneficiaries and a majority (58%) of “other” racial and ethnic groups rely on its survivor and disability benefits.

According to the report, the greater reliance on survivor and disability benefits reflects socioeconomic factors, such as lower educational attainment and higher rates of poverty, disability, sickness, and – for African Americans and Native Americans – death. These usage patterns reflect the effects of occupational segregation, with people of color more often working in physically challenging jobs that are more likely to lead to temporary or permanent disability, as well as early death.

“Any changes to Social Security will significantly impact future generations, and the American population will be much different ethnically and racially than it is today. It’s crucial that policymakers consider how people of color use Social Security and how it can be modernized to meet the needs of our increasingly diverse society,” said Commission member Dr. Maya Rockeymoore, president and CEO of Global Policy Solutions. “People of color are more economically vulnerable and depend on Social Security benefits to meet basic needs when they or family members face death, disability, or old age.”

For instance, the report argues that for Latinos and Asians, who have longer life expectancies than whites or other minority groups, the annual cost of living adjustment (COLA) is an especially important feature because it maintains the purchasing power of Social Security benefits for those who are very long-lived. On the other hand, Social Security’s early retirement feature is vital to shorter-lived African Americans and Native Americans since it allows them to retire at 62.

“Two-thirds of Latino workers are employed by companies that do not offer any type of retirement savings plan. Thus, Latinos tend to depend more on Social Security as their sole source of income in old age,” said Commission member Leticia Miranda, associate director of economic and employment policy for the National Council of La Raza. “For many families Social Security is critical to staying out of poverty.”

“Social Security is particularly important for helping vulnerable refugee and immigrant communities to be economically secure,” said Commission member Doua Thor, executive director of the Southeast Asia Resource Action Center. “Elderly refugees and immigrants actually have lower benefit levels due to shorter work histories, working in the low-wage service sector, and simply not knowing of the program due to language and cultural barriers. In spite of these obstacles, Social Security is important in our communities because we are more likely to depend on it as our sole income in retirement.”

The report lays out a plan for increasing revenue, in part by urging Congress to “Scrap the Cap” on Social Security payroll contributions (currently capped at $106,800 for high wage earners) and making the benefit formula less generous for high earners. This option alone would eliminate most of Social Security’s long-term revenue shortfall. Other options identified by the Commission for reaching solvency include adding all new state and local workers to the program; and slowly raising Social Security’s payroll tax by 1/40th of one percent over 20 years.

“Social Security is the only source of income for two of every five African American retiree households age 65 and older, said Commission member Dr. Wilhelmina Leigh, senior research associate at the Joint Center for Political and Economic Studies. “So any proposals to guarantee system solvency should also guarantee the adequacy of benefits going forward.”

Plan for a New Future also recommends improving benefits for future recipients by updating the Special Minimum Benefit to 125% of poverty to strengthen benefits for those who have spent their adult lives in low-paying jobs and who are unlikely to have private pensions or other savings to fall back on; reinstating the student benefit to support students (until the age of 22) attending college or vocational school; increasing benefits for low-income widowed spouses; and providing dependent care benefits to help those who serve as unpaid caregivers for children.