Biden’s SOTU Addresses Social Security, Drug Costs and Medicare — What This Means for Retiree Budgets?
Written by
Yaël Bizouati-Kennedy
Edited by
Cory Dudak
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President Joe Biden delivered the State of the Union address on March 7, in a wide-ranging speech in which he addressed what he plans to change — or not change — about drug costs and Medicare, as well as issues around Social Security.
These hot button matters not only deeply affect Americans’ wallets, but can be cause for worry. For instance, in an alarming annual report released last March, the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds said Social Security will be able to pay full benefits until 2034, but then faces funding shortfalls if lawmakers don’t take action.
And in terms of drug costs, many workers are entering retirement with medical debt — 31% of boomers with commercial insurance through their employer have experienced medical debt, and 14% currently owe money, according to a survey by Goodroot.
Social Security
During his address, Biden reiterated his opposition to raising the retirement age for Social Security — a solution some Republicans have been pushing for.
In a statement in response to President Biden’s State of the Union address, AARP CEO Jo Ann Jenkins said she was “encouraged that the State of the Union addressed many of the most important issues to older Americans today, including protecting Social Security, lowering the cost of prescription drugs, and addressing our nation’s caregiving crisis, and supporting affordable high-speed internet.”
Jenkins added that Americans should be able to trust that Social Security and Medicare — which they have contributed to throughout their working lives — will always be there for them. “We applaud lawmakers on both sides of the aisle for their commitment to protecting these programs and will fight to ensure promises are kept,” she said in the statement.
Medicare
In terms of Medicare, Biden is proposing to let Medicare negotiate drug prices for at least 50 drugs every year that seniors rely on, like those used for treating heart disease, cancer and diabetes, according to a March 7 fact sheet.
“For years people have talked about it but I finally got it done and gave Medicare the power to negotiate lower prices for prescription drugs just like the VA does for our veterans,” Biden said, according to a transcript of his remarks. “That’s not just saving seniors money. It’s saving taxpayers money cutting the federal deficit by $160 Billion because Medicare will no longer have to pay exorbitant prices to Big Pharma.”
Lower Drug Costs
During the address, Biden also called on Congress to expand a $2,000 cap on out-of-pocket spending for prescription drugs in Medicare to all private insurance plans. “Starting next year that same law caps total prescription drug costs for seniors on Medicare at $2,000 a year even for expensive cancer drugs that can cost $10,000, $12,000, $15,000 a year,” said Biden.
“Our research found that more than half of Americans who owe medical debt owe more than $2500,” said Steve Palma, president of medical cost solutions at Goodroot. “The high cost of prescription drugs is a major driver of medical debt, especially for seniors. Capping out-of-pocket expenses for seniors to ensure they maintain affordable access to the care and medications they need is a step in the right direction.”
In addition, the administration is proposing to cap Medicare cost-sharing at $2 for common generic drugs, adding that Medicare will be launching a new model to limit Medicare Part D cost-sharing, according to the White House’s fact sheet.
AARP’s Jenkins welcomed these proposals, noting that according to AARP’s polling, regardless of political ideology, 60% of Americans are concerned about being able to afford the medication they or their family need.
“Now that Medicare can finally negotiate for lower drug prices, American families and taxpayers will save billions of dollars,” she said in the statement.
Yet, other experts don’t agree with this premise, saying this will not help retirees, as the increased spending would only make inflation worse. “The free market is what helps retirees,” said Ann Marie Buerkle, former New York Republican congresswoman, former U.S. Consumer Product Safety Commission (CPSC) chairwoman and former nurse. “Pharmacy Benefit Managers (PBMs) are already working to lower the costs of drugs for millions of Americans, including seniors. Instead of using the government to pick winners and losers, Biden should get out of the way and let PBMs continue to do their job.”
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