What Do Americans Know About Entitlements?

Transcription

1 What Do Americans Know About Entitlements? Saving Medicare and Social Security from bankruptcy will be no small feat given the gap in the public's understanding of these programs. BY ROBERT J. BLENDON, JOHN M. BENSON, MOLLYANN BRODIE, MARIO BROSSARD, DREW E. ALTMAN, AND RICHARD MORIN OVER THE PAST SEVERAL YEARS, Washington decisionmakers have had a difficult time reaching consensus on what should be done about the nation's financially troubled entitlement programs. A number of opinion studies have shown that, regardless of elite opinion that something needs to be done, the public shows little support for major changes in the two largest entitlement programs, Medicare and Social Security. 1 This resistance raises the question of how well informed the public is about the problems affecting entitlement programs. This paper seeks to address the issue of public knowledge about entitlements by trying to answer five questions: (1) Do Americans know what the term entitlement program means? (2) Do they know the relationship between entitlement spending and the federal budget deficit? () Does the public think that Medicare and Social Security are facing financial problems, including possible bankruptcy? (4) Is the public knowledgeable about the main causes of the financial problems facing Medicare and Social Security? (5) Do seniors, the main beneficiaries of Medicare and Social Security, have beliefs and levels of knowledge that differ from those of the general public? DATA AND METHODS. The data reported here are derived primarily from a survey conducted as part of The Washington Post/Henry J. Kaiser Family Foundation/Harvard University Survey Project. Representatives of the three sponsors worked closely to develop the survey questionnaire and analyze the results. The interviews were conducted via telephone by Chilton Research between 1 and 2 March 1997, with a randomly selected sample of 1,09 adults nationwide. The sample included 155 adults age sixty-five and older. 2 Earlier studies, notably two ongoing series of surveys conducted for the Employee Benefit Research Institute and the American Council of Life Insurance, have asked questions probing public knowledge of entitlements. Our goal was to investigate in a single comprehensive survey both public perceptions of what constitutes an entitlement and public knowledge about the major entitlement programs. RESULTS WHAT IS AN ENTITLEMENT PRO GRAM? Historically, Medicare and Social Security have been presented to the public as two separate programs. Recently, policymakers have begun to use the term entitlements to refer to these two programs, as well as a Ill Bob Blendon is professor of health policy and political analysis at Harvard's John F. Kennedy School of Government and the Harvard School of Public Health. John Benson is deputy director of the Harvard Program on Public Opinion and Health/Social Policy, Harvard School of Public Health. Mollyann Brodie is senior researcher and director of special projects, The Henry ]. Kaiser Family Foundation, in Menlo Park, California. Mario Brossard is assistant director of polling at The Washington Post. Drew Altman is president of the Kaiser Family Foundation. Richard Morin is director of polling at The Washington Post. H E A L T H A F F A I R S - S e p t e m b e r / O c t o b e r The People-to-People Health Foundation, Inc.

2 112 number of other federal programs. Because the term entitlement is now commonly used in public discourse about the nation's budgetary problems, our survey examined how well people understand this term and how they relate it to specific federal government programs. The survey divided knowledge of the term entitlement into two parts (Exhibit 1). In the first part, respondents were read four broad descriptions and asked whether or not each one was an entitlement. Two-thirds (68 percent) of respondents said that basic rights guaranteed in the U.S. Constitution were entitlements. This answer reflects the broad definition that many Americans associate with the term. On each of the other three items, about six in ten respondents gave the correct response. Tax credits for workingpoor persons were correctly identified as an entitlement by 61 percent, and 57 percent correctly categorized federal government programs in which by law certain persons are guaranteed cash payments or health insurance benefits. Fifty-seven percent said correctly that tax deductions for wealthy persons were not entitlements. In the second part, we read respondents a list of eleven specific federal government programs and tax deductions. Majorities correctly identified all seven programs that were in fact entitlements according to the Bipartisan Commission on Entitlement and Tax Reform. About three-fourths of respondents named Social Security, veterans' benefits, and Medicare as entitlements, and two-thirds listed Medicaid and unemployment compensation. Majorities also characterized federally subsidized loans for college students and food stamps as entitlements. However, majorities also incorrectly identified Head Start and tax deductions for mortgage payments as entitlements, and a plurality considered welfare under the new welfare reform law to be an entitlement. Only one in four knew that Head Start and welfare under the new reform law were not entitlements, and one-third knew that tax deductions for mortgage payments were not. EXHIBIT 1 Respondents' Knowledge Of Entitlements Do you think this Is an entitlement or not? Broad descriptions Basic rights guaranteed in the U.S. Constitution Tax credits for working-poor persons Federal government programs in which by law certain persons are guaranteed cash payments or health insurance benefits Tax deductions for wealthy persons Specific programs/tax deductions Veterans' benefits Social Security Medicare Medicaid Unemployment compensation Federally subsidized loans for college students Food stamps Head Start Tax deductions for mortgage payments Welfare under the new welfare reform law Tax deductions for capital gains for business Yes 68% 61 a 57 a 6 78 a 78 a 76 a 70 a 67 a 62 a 59 a No 25% a 2 57 a a a 25 a 4 a No opinion a For each item, this response is the correct answer, according to the Bipartisan Commission on Entitlement and Tax Reform: Final Report to the President, % HEALTH AFFAIRS - Volume 16, Number 5

3 ENTITLEMENT SPENDING AND THE FEDERAL DEFICIT. Americans' misconception about the relationship of entitlements to the total federal budget hampers their understanding of the role that reducing future entitlement spending should play in balancing the federal budget. When asked to choose the two largest areas of federal spending from among five items on a list, only one in four respondents (24 percent) correctly named Social Security. A majority (56 percent) did correctly identify defense as one of the two largest areas of spending. However, nearly two-thirds (64 percent) named foreign aid, which actually constituted only 1 percent of the fiscal year 1996 budget. 4 Many Americans also are confused about the relationship between the federal budget and the Medicare and Social Security trust funds. Substantial proportions of survey respondents did not know that Medicare (9 percent) and Social Security (50 percent) are part of the total federal budget when the government calculates the budget deficit. FINANCIAL STATUS OF MEDICARE AND SOCIAL SECURITY. Most Americans believe that the Medicare and Social Security programs have major financial problems but are not in crisis. One in three respondents (6 percent) said that the Social Security program is in crisis, while 46 percent said that the program has major problems but is not in crisis (Exhibit 2). Only one in six (17 percent) said that the program has minor or no problems. One in five (21 percent) thought that the Medicare program is in crisis, while 54 percent said that it has major problems. Twenty-two percent said that the program has minor or no problems. Interestingly, Americans age sixty-five and older seem to be less worried than younger adults are about the status of Social Security. Only 15 percent of the senior respondents thought that the program is in crisis, and more than one-third (7 percent) believed that the program has minor or no problems. Exhibit illustrates the projected financial problems of the Medicare Hospital Insurance Trust Fund. More than two-thirds of our respondents knew that if no action is taken in the future, the Medicare (69 percent) and Social Security (76 percent) trust funds will go bankrupt, but most did not differentiate between the time periods when the two trust funds are expected to run out of money. In fact, at current rates, the Medicare hospital trust fund is expected to be out of balance by 2001, more than two decades before the Social Security trust fund reaches that status. Only three in ten respondents knew that the Medicare trust fund is likely to go bankrupt within the next ten years if Congress takes no action (Exhibit 4). Similarly, 27 percent thought (incorrectly) that the Social Security trust fund will go bankrupt within the next ten years, while 47 percent knew that the fund is expected to go bankrupt further in the future. The public sees both programs as being on the same financial trajectory, as a problem in the long-term future, but not one that requires immediate action. CAUSES OF FINANCIAL PROBLEMS. Although most Americans believe that both 11 EXHIBIT 2 Financial Status Of The Medicare And Social Security Programs Medicare Social Security Total Age 65+ 6% 15% Respondents' perceptions The program is in crisis The program has major problems but is not in crisis The program has minor problems The program has no problems No opinion Total 21% Age % HEALTH AFFAIRS - September/October

4 EXHIBIT Projected Medicare Hospital Insurance Trust Fund Income And Costs SOURCE: 1997 Annual Report: of the Board of Trustees of the Federal Hospital Insurance Trust Fund, House Document (April 1997), Medicare and Social Security are facing major financial problems, they disagree with most experts on the chief causes of the problems. 5 In keeping with the public's diagnosis of why health care costs are high in general, most of the respondents (8 percent) blamed the financial problems facing Medicare primarily on excessive charges by providers (Exhibit 5). Also widely cited as significant contributors to Medicare's financial problems were fraud and abuse by patients, doctors, and hospitals (75 percent) and poor management by the government (75 percent). The public gives somewhat less significance to other factors frequently cited to explain the program's financial problems. About half of respondents (54 percent) cited more people going on Medicare and leaving fewer workers to pay Medicare payroll taxes to support them, and about half (47 percent) noted that because people are living longer, they cost the Medicare program more money. Only one in four respondents (24 percent) believed that the new drugs, tests, and treatments offered to the elderly deserve much of the blame. The factor cited most often by our respon- EXHIBIT 4 Likelihood Of Bankruptcy Of The Medicare And Social Security Trust Funds Respondents' perceptions Likely to go bankrupt: Within the next ten years Further in the future No opinion about when Not likely to go bankrupt No opinion Medicare 69% a 29 a Social Security 76% a a 2 21 a For each item, this response is the correct answer, according to the Bipartisan Commission on Entitlement and Tax Reform: Final Report to the President, HEALTH AFFAIRS - Volume 16, Number 5

5 EXHIBIT 5 Why Is Medicare Facing Financial Problems? Reasons cited Excessive charges by doctors and hospitals 8% Fraud and abuse by patients, doctors, and hospitals 75 Poor management by the government 75 More people are going on Medicare, and there will be fewer workers to pay Medicare payroll taxes to support them 54 Malpractice lawsuits and settlements 52 People on Medicare are living longer, so they cost the program more money 47 New drugs, tests, and treatments being offered to the elderly 24 Percent citing as a major reason dents as a major reason for the Social Security program's financial problems was that money from the Social Security trust fund is being spent on programs other than Social Security (67 percent) (Exhibit 6). The public seems to suspect that if funds were not being siphoned from the trust fund for other purposes, Social Security might not be facing financial problems. SENIORS' KNOWLEDGE OF ENTITLE- MENTS. One surprising finding is that on most measures, seniors, who are the main beneficiaries of these entitlement programs, have about the same level of knowledge about Medicare and Social Security as other adults have. However, seniors were considerably less likely to think that Medicare (54 percent of seniors versus 72 percent of nonseniors) and Social Security (47 percent versus 81 percent) will go bankrupt if no action is taken. Seniors were less likely than others to be aware that Medicare (57 percent of seniors versus 76 percent of nonseniors) and Social Security (51 percent versus 71 percent) are pay-asyou-go programs that is, that Medicare and Social Security payroll taxes collected today are used to pay benefits for current recipients. CONCLUSIONS Previous opinion surveys have shown that Americans see the major entitlement programs, Medicare and Social Security, as important to their families and that they want to ensure the financial well-being of those programs. 6 However, our survey identifies key 115 EXHIBIT 6 Why Is Social Security Facing Financial Problems? Reasons cited Money in the Social Security trust fund is being spent on programs other than Social Security Money in the Social Security trust fund is not being invested wisely Fraud and abuse by people who are not entitled to benefits More people are going on Social Security, and there will be fewer workers to pay Social Security taxes to support them People on Social Security are living longer, so they cost the program more money Percent citing as a major reason 67% HEALTH AFFAIRS - September/October

6 116 gaps in public knowledge about entitlements and their role in the federal budget. 7 The data in this survey have four important implications. First, in presenting the "entitlement crisis" to the public, the term entitlement is not a good substitute for discussing specifically the problems of the Medicare and Social Security programs. Many Americans have unclear notions of what an entitlement is, and they might not understand what the media, politicians, and policy experts are talking about. Second, the public believes that there are ways to save the major entidement programs without having to make real sacrifices. This presents a difficult challenge to decisionmakers, because almost all experts recommend at least some policies that require sacrifice by beneficiaries or taxpayers. It appears that lack of knowledge is driving people away from the solutions that experts and commissions favor, leading to paralysis and inaction, at least among the public. For example, the recent focus on fraud and abuse in hospitals will probably lead the public to be less receptive to other cost-saving changes such as changing the age of eligibility for Medicare. Third, those who are interested in the future fiscal health of entitlements need to be keenly aware of the central political role played by seniors on these issues and the need to do more to educate this population. Americans age sixty-five and older are the group least convinced that the nation is facing an entitlement crisis. Yet this is also the group most likely to vote against candidates who support major reductions in future spending on Medicare and Social Security. 8 This makes dealing with the future solvency of entitlements even more difficult than portrayed in surveys of the general public. Finally, the entitlement debate may not be an area of discourse in which expert or elite opinion is the dominant voice on the future of public policies. Because some of the entitlement programs represent to millions of Americans the most important domestic activities of the federal government, it will be difficult to bring about major reforms in these programs without a broader base of public understanding and support for change. This suggests the need for a major public education effort, which would involve both political and private-sector leaders, to raise the base of public knowledge about the critical issues affecting the future of the programs. The authors thank Diane Rowland and Patricia Newman of The Henry]. Kaiser Family Foundation for their assistance in preparing this paper. NOTES 1. R.J. Blendon et al., "The Public's View of the Future of Medicare," Journal of the American Medical Association (22/29 November 1995): ; "Social Security: American Icon," Public Perspective (February/March 1995): 21-26; and Princeton Survey Research Associa tes/newsweek Poll (Storrs, Conn.: Roper Center for Public Opinion Research, 9 January 1997). 2. All public opinion surveys are subject to sampling and nonsampling error. For results based on a sample of this size, one can say with 95 percent confidence that the error attributable to random sampling could be approximately plus or minus percent. Sources of nonsampling error include nonresponse bias, as well as question wording and ordering effects. These latter factors are difficult to measure.. Bipartisan Commission on Entitlement and Tax Reform Final Report to the President (Washington: U.S. Government Printing Office, 1995), Congressional Budget Office, Reducing the Deficit: Spending and Revenue Options, August 1996 (Online version) (Washington: CBO, 1996), Table R.J. Blendon et al., "Bridging the Gap between Expert and Public Views on Health Care Reform," journal of the American Medical Association (19 May 199): RJ. Blendon et al., "The Public and the Welfare Reform Debate," Archives of Pediatrics and AdolescentMedicine (October 1995): Previous studies have shown that Americans lack a great deal of knowledge about how the federal government and the political system function. See R.J. Blendon et al., "Changing Attitudes in America," in Why Americans Mistrust Government, ed. J.S. Nye Jr., P.D. Zelikow, and D.C. King (Cambridge, Mass.: Harvard University Press, forthcoming). This may in turn lead to a lack of public attention to and participation in policy debates. However, the importance of the major entitlements to millions of Americans will likely lead to considerable public interest. 8. RJ. Blendon et al., "Voters and Health Care in the 1996 Election," Journal of the American Medical Association (16 April 1997): iealth AFFAIRS - Volume 16, dumber 5