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Medicare Watchdog Seats Have Gone Unfilled for Nearly a Decade

— Medicare, Social Security public trustees are supposed to safeguard reports' accuracy

MedpageToday
A black and white night shot of the Capitol Building in Washington, DC.

Last month, as happens every spring, the and Social Security trustees' annual reports came out.

This year, they happened to bear what many would call good news. The Medicare trust fund would stay solvent until 2036, and the Social Security funds' reserves in 2035, 5 years and a year longer than predicted last year, respectively.

But the reports were missing something, as they have annually since 2015: independent input from two public trustees.

The trustees' reports, which are supposed to forecast Medicare and Social Security funds' solvency for decades into the future, should be compiled by six people.

Four are partisan administration officials serving under the current president: the secretaries of Labor, HHS, and Treasury, and the Social Security Commissioner.

But in 1983, Congress added a requirement that the administration also nominate two public trustees – from different parties – to be confirmed by the Senate. They serve as independent voices to ensure the annual reports don't have an overt, or a covert, political agenda.

"The public trustees have been the laboring oars of the process," said Charles Blahous, an economics, retirement, and social security policy expert at George Mason University in Virginia who served as Republican public trustee during the Obama administration from 2010 to 2015. They work with staff of the four ex-officio cabinet offices and have "a hands-on role in crafting the projections. We could be very focused on the details of the projections in a way that the cabinet secretaries could not."

"No one in the administration told us what to write or how to say it, so the public did not have to worry that the report was being massaged or altered in any way to serve the policy or political positions of the administration," Blahous said.

After the reports come out, the public trustees act as messengers, explaining their implications to the public in plain English, Blahous said: "We were often the bearers of bad news."

Marilyn Moon, a healthcare and Medicare expert who served as a public trustee from 1995 to 2000, said the position serves as an important check on the administration, which "always has the incentive to want the report to be consistent with its other views on how the economy is doing, and that's not always appropriate."

But for the past 9 years, there have been no public members to sound the alarm.

There's been no independent voice to ensure that the complicated calculations for economic assumptions -- which include such variables as life expectancy, medical costs, revenue to the funds from payroll taxes, and impact from immigration -- are based on sound calculations. An important ingredient is the fertility rate, which this year's report reduced from 2.0 to 1.9 per woman, showing a declining future workforce available to pay into the funds.

Joseph Antos, senior fellow with the American Enterprise Institute and expert in health policy economics, told 51˶ that "politics" is the reason why the seats have gone unfilled for so long.

"It has nothing to do with who the current nominees are," Antos said.

Over the years, it's "the classic, 'I'm a Democrat and I don't want a Republican' and 'I'm a Republican and I don't want a Democrat.' ... Nobody is ever turned down – it's just that the [Senate finance] committee to the [Senate] floor."

In 2015, President Barack Obama the two public trustees who served during his last term to continue in the Trump Administration. They were Blahous and Democrat Robert Reischauer, a federal budget expert and former director of the Congressional Budget Office, who is now with the Urban Institute. The Senate never re-confirmed them.

In 2020, former President Donald Trump Democrat William Dauster, an attorney and economist, and Republican James Lockhart III, a former principal deputy commissioner and chief operating officer of the Social Security Administration. They also weren't confirmed.

In 2022, President Biden nominated Democrat , senior vice president of KFF's Program on Medicare Policy and former staff member for the House Committee on Ways and Means Subcommittee on Health, and Republican , director of CMS's Center for Medicare during the Trump administration.

They too were never confirmed. Neuman declined comment and Kouzoukas could not be reached.

During a Senate Finance Committee hearing last fall, Sen. Elizabeth Warren (D-Mass.) to Kouzoukas's nomination. She accused him of "shocking and deeply unethical" financial conflicts of interest because of his current affiliation with "the for-profit health insurer Clover Health -- a company that derives nearly all of its revenue from Medicare," including $1 billion in revenue from its Medicare Advantage plans in 2022, as she wrote in a to him.

Much of what the trustees do is "behind-the-scenes," Antos said. For instance, "when even serious analysts will come up with -- bluntly -- cockamamie ideas about how something might go, and hold on to those ideas that could substantially distort ... [projections] and policymakers would take action on the basis of something that is in this report. That's the issue."

Many experts told 51˶ they are especially troubled now because the latest estimates project that the Social Security trust fund expenditures will in 2035, when benefits must be reduced. Social security benefits are what many retired Americans rely on to pay their medical bills, and monthly deductions from their checks pay into Part B and Part D funds.

On top of that, the Medicare trust fund that pays hospital, skilled nursing, hospice, and home health costs will become insolvent in 2036.

Options -- some with dire political consequences -- must be considered to plan ahead, such as raising the retirement age, raising payroll taxes, imposing income tests that would limit benefits for those with other sources of revenue, cutting healthcare spending, stopping some benefits or finding other coffers to tap.

But no one wants to think about that right now, especially in an election year, experts said.

Marilyn Serafini, director of the Health Project for the Bipartisan Policy Center, noted the role Medicare Advantage (MA) plans play in drawing the Medicare trust funds down faster, since Medicare spends 22% more for MA enrollees than it would if those same beneficiaries were in fee-for-service.

"And the more people move over to Medicare Advantage, the more that's going to affect the solvency and finance issues," she said. "The word I would use is complacency."

Blahous said that since there have been no public trustees, the four ex-officio trustees "have been very reluctant to make any fundamental changes in the assumptions or methodologies, because they know if they do, someone will say 'Aha! Look what this administration did. They changed this number. Now the report's not credible anymore because it's been politically manipulated.'"

"But what that also means is that things don't get reviewed and challenged and overhauled and updated in perhaps the way that they should be," he said. "And that's a real problem."

Joshua Gordon, health policy director for the Committee for a Responsible Federal Budget, said in the 24 years he's worked on these issues, he's never seen government actuaries who work on these reports "do anything weird with the numbers or the assumptions. And if they do make changes they're transparent about them, though it's certainly plausible at some time in the future that could change, or be subject to political influence."

But helping the public understand "how much of our growth in spending is from Medicare Advantage versus traditional Medicare ... could be offered by the public trustees, and the two nominees right now are both experts ... who could have some effective things to say to help American people understand what the issues are."

The problem, he said, is that "every year that goes by, these programs become closer to insolvency, and with the baby boomer generation in retirement, we have less options available to slowly phase in the changes we need to make."

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    Cheryl Clark has been a medical & science journalist for more than three decades.