April 13, 2013

Social Security, Medicare costs add up for Sumner County

Before lunch is served at the clean, bright senior center in Wellington, 88-year-old Ruth Stinson chats about Social Security and Medicare.

Before lunch is served at the clean, bright senior center in Wellington, 88-year-old Ruth Stinson chats about Social Security and Medicare.

“It’s very important,” she says. “I hope they leave it the way it is.”

Ruth’s friend Lawrence Norris, 97, nods in agreement.

“I got a lot more than I paid in,” he says, smiling. “Don’t tell anybody.”

Both are part of one of Sumner County’s most important demographic groups — those 65 and older. The Census Bureau says 3,786 people in Sumner were that age in 2010. That’s 16 percent of the county’s residents, compared with 13 percent nationwide.

If you’re trying to understand the importance of federal spending in places like Sumner — and why cutting spending is so difficult — start here.

In 2010, Social Security transferred more than $42.9 million to Sumner County’s elderly residents. That’s more than the federal government spent on agriculture subsidies, Medicaid, aid to education, or similar programs.

Washington also spent $4.8 million in retirement and disability payments for Sumner’s federal workers, who were not initially part of Social Security. Military retirees and the disabled got $4.6 million. Railroad workers got $6.9 million in social insurance, a Social Security-like program for former railroad employees.

Taken together, federal retirement payments alone averaged roughly $15,600 per elderly person in Sumner that year. That money is critical in helping seniors live in at least some comfort in retirement.

But it doesn’t tell the whole story.

In 2010, Washington spent another $47.8 million in Sumner County on Medicare: hospital payments, doctor visit insurance and prescription drug coverage for the elderly. That’s another $12,600 per elderly recipient, on average.

All told, Sumner County seniors collected, on average, more than $28,000 in federal retirement and health care benefits that year.

Rural dependent on urban

Medicare and Social Security are entitlements. As a matter of law, eligible seniors get the payments because they’re citizens. (Some seniors say the word “entitlements” is misleading; they prefer social insurance or earned benefits instead.)

Cutting entitlement payments is the single most significant way to reduce federal spending. Social Security and Medicare payments represent a third of all federal spending, about $1.2 trillion a year.

At the same time, cutting entitlements is the single most difficult step for a politician to take, because the elderly, their families and the businesses dependent on entitlement spending would face financial pain if those payments dropped.

That’s true even for the non-elderly: Social Security also made $10.5 million in payments to Sumner’s disabled workers in 2010 and $13.5 million in survivors’ payments.

Fully half of all federal spending in Sumner County goes for Social Security and Medicare.

Sumner is a “taker” largely because, like most conservative rural counties, it’s older and therefore often sicker than many urban and suburban areas — where younger, healthier, and increasingly more liberal working families live.

Kansas and Missouri get more from Washington than their residents pay in taxes because their residents are older. Both states voted for Mitt Romney.

“Red states are dependent on blue states for federal transfer money. Significantly so,” said Steven Maynard-Moody, director of the Institute for Policy and Social Research at the University of Kansas. “And actually, rural is dependent on urban. That’s kind of a dirty secret.”

U.S. Rep. Kevin Yoder, R-Overland Park, says the contradiction plays out in politics.

“Many of the states that are most against federal overspending,” he said, “are recipient states.”

‘We paid for that’

Cutting entitlement spending can prove especially hard because so many recipients believe they’re tapping into accounts they’ve earned.

Seniors pay a premium for Medicare’s physician coverage, for example, making it seem more like a normal private medical insurance program than a taxpayer-supported one. There are deductibles and co-pays as well.

Railroad retirees contributed to their retirement systems, and almost all workers paid into Social Security during their careers, as did their employers.

That leads many seniors to believe, inaccurately, that they’re simply being repaid from their individual federal retirement accounts.

“We paid for that,” Lawrence Norris says. “It’s ours.”

Yoder hears that often. “Most constituents I talk to feel very strongly that Social Security and Medicare are benefits that are theirs,” he said. “It’s not a federal program, it’s their dollars they’re getting back.”

Indeed, many seniors see federal retirement and health care spending as fundamentally different from spending on food stamps, or student loans, or similar government activities.

“There’s a lot of federal spending that people don’t think of as federal spending,” said Bob Bixby, executive director of the deficit-hawk group the Concord Coalition.

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