Grading Obama's performance on retirement, aging issues

By Mark Miller

CHICAGO (Reuters) - In his farewell address last week, President Barack Obama quoted something his mother used to tell him: “Reality has a way of catching up with you."

Here is one reality that really is catching up with us: as a nation, we are getting older quickly. The U.S. population over age 65 will nearly double by 2050, to 83.7 million, according to the U.S. Census Bureau.

As Obama leaves office this week, it is a good time to ask: how should we grade his administration on its efforts to help prepare us for the graying of America?

When he took office in 2009, the president’s top two priorities were to steer the economy away from a cliff, and to pass the Affordable Care Act (ACA). He achieved both, but policy on aging and retirement never emerged as a priority. Still, the administration is leaving its mark on healthcare, retirement saving and pension reform. The report card includes some As, but there are some Bs, Cs and Ds, too.

And, in the category of “the dog ate my homework,” it must be mentioned that an obstructionist Congress did its best to create gridlock during most of the president’s time in office. That gives the president a bit of an excuse - and merits a big fat F for lawmakers.

HEALTHCARE

The ACA has been a lifesaver - literally - for older Americans not yet eligible for Medicare who did not have employer coverage. Before the ACA, it was near impossible for them to find quality insurance. “Before the ACA became law, our help line took a significant number of calls from people over age 55 desperately trying to find affordable insurance, or if there was any way they could enroll in Medicare,” said Joe Baker, president of the Medicare Rights Center, a consumer and advocacy group.

“Those calls have mostly gone away - or when we get them, we refer them to the ACA marketplaces or to healthcare.gov.”

Baker also credits the ACA for making Medicare more financially stable and focused on delivering healthcare with better quality and value. The administration did fail to get anything done to control rising prescription drug prices, such as allowing Medicare to negotiate prices as it does hospital rates. Still, a strong performance. GRADE: A.

SOCIAL SECURITY

Social Security is the most important source of retirement income for the majority of American workers, but it is facing financial shortfalls that could force benefit cuts as early as 2034 - and the math needed to fix the problem gets more challenging as that date approaches. Progressives have been urging a solution that not only eliminates the shortfall but expands benefits for middle- and lower-income households. The president embraced that idea only this past summer in the heat of the presidential campaign. And earlier, in the days of the “grand bargain” to get the federal deficit under control, he signaled willingness to support benefit cuts. GRADE: C

LONG-TERM CARE

Roughly half of Americans now turning 65 will require some level of long-term care during retirement. But the current system of insuring that risk is a patchwork of private insurance that has not penetrated the market widely, and an overtaxed Medicaid system.

The Obama administration took aim at the problem with the Community Living Assistance Services and Supports (CLASS) Act, a public option that would have expanded LTC coverage as part of the ACA. But CLASS - which did have some financial sustainability issues that needed to be addressed - was repealed as part of the 2013 “fiscal cliff” budget deal.

“They chose to trade it away as part of a tax deal,” said Bruce Chernof, president of the Scan Foundation, which focuses on long-term care.

Long-term care risk is a significant wild card in most retirement plans, Chernof notes. “Until we wrap our arms around the growing long-term care needs we have as a country, we will fail to address retirement security properly.” GRADE: D

RETIREMENT SAVING

The administration pushed through new regulation that protects retirement savers from conflicted investment advice. The so-called fiduciary standard, headed for final implementation in April, is the administration’s biggest retirement policy success, alongside the ACA.

Earlier, the president proposed requiring most employers to offer a retirement saving plan to workers - the auto-IRA. But the plan’s mandatory participation feature made it dead on arrival for Republicans in Congress, who wanted nothing to do with anything featuring required participation after the bloody battle over the ACA.

“It would have been the largest expansion of retirement coverage in our history,” said Joshua Gotbaum, a guest scholar at the Brookings Institution who served as director of the Pension Benefit Guaranty Corporation during the Obama years.

Some states are creating auto-IRA programs of their own (http://reut.rs/2dAT4pW). Gotbaum thinks that if enough states act on their own, local plans could yet be rolled up in a single, unified national program. GRADE: B

The transition of power to Donald Trump has created great uncertainty in all policy areas. It is impossible to say where we go next on retirement and aging - or if Obama’s successes will be repealed. But one thing we do know: demography is destiny. Ready or not, the aging of America is coming - and Washington could use some remedial tutoring in the subject.

(Editing by Matthew Lewis)

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