Fiscal Year 1993 GAO Reports on Issues
Primarily Affecting Older Americans
Screening Mammography:
Higher Medicare Payments
Could Increase Costs
Without Increasing Use
(GAO/HRD-93-50, Apr. 22,
Rental Housing: Serving
the Elderly Through the
Section 8 Program
(GAO/RCED-93-12FS,
Mar. 29, 1993)
employers had announced plans to do so. The new accounting standard
(FAS 106), which highlights the magnitude of the liabilities, has also
spurred changes to retiree health benefit plans. Many companies claim
that they have modified retiree health benefits because FAS 106 reduces
reported income and shareholder equity. The Employee Retirement
Income Security Act of 1974 authorizes the federal government to regulate
retiree health benefits. Recent court decisions have allowed employers to
modify or terminate health benefits for current and future retirees if they
reserved the right to do so in benefit plan documents or collectively
bargained agreements.
Increasing the cap on Medicare payments to encourage physicians to offer mammography in their offices is not a cost-effective way to expand the use of screening mammography. A study by the Department of Health and Human Services shows that the United States already has more than enough mammography machines, even if all women received screening mammograms at intervals suggested by the National Cancer Institute. A substantial increase in the Medicare payment to support more low-volume machines is likely to increase excess capacity, increase prices for mammograms, and reduce the availability of affordable mammography services. In addition, inconsistent guidelines issued by the Health Care Financing Administration and differing Medicare regulations for diagnostic and screening mammography have led to confusion about the appropriate billing procedures for screening mammography provided under package leasing arrangements.
The Department of Housing and Urban Development (HUD) provides rental housing assistance to families through its section 8 voucher and certificate programs. By subsidizing a portion of household rent, HUD hopes to enable more low-income families to live in private rental housing that is decent and safe. This fact sheet provides information on the following section 8 issues: (1) the demographic characteristics of elderly and nonelderly voucher and certificate recipients, including sex, race, handicapped status, adjusted income, and education; (2) the quality of the housing units rented by elderly voucher and certificate recipients; and (3) the proportion of income that elderly and nonelderly voucher recipients pay for rent.
Fiscal Year 1993 GAO Reports on Issues
Primarily Affecting Older Americans
District's Pensions: Billions
of Dollars in Liability Not
Funded (GAO/HRD-93-32,
Nov. 30, 1992)
District's Workforce:
Annual Report Required by
the District of Columbia
Retirement Reform Act
(GAO/GGD-93-81, Mar. 31,
Financial Audit: Pension
Benefit Guaranty
Corporation's 1992 and
1991 Financial Statements
(GAO/AIMD-93-21, Sept. 29,
Pension obligations owed to current D.C. employees and retirees exceed
the District's pension fund assets by nearly $5 billion. Further, the
percentage of pension obligations covered by assets is lower than that
reported by most of the comparable plans GAO examined. This inadequate
funding results primarily from the federal government's transferring a
$2 billion unfunded liability for pension benefits to the D.C. government
more than a decade ago. There is no legal requirement to amortize this
unfunded liability. Mandated federal and District contributions to the
retirement funds, through 2004, will not stop the unfunded liability from
increasing. It will reach an estimated $7.7 billion by that year. Under the
D.C. Retirement Reform Act, the unfunded liability will never be
eliminated, although the formula for determining District contributions
will change beginning in 2005 and the liability should stop increasing,
assuming the District makes the required contributions. In 2005, under the
changed formula, the District's annual contribution could represent about
15 percent of the revenue collected by the District, compared with about
8 percent in 1991.
The federal government makes annual payments to the District of Columbia retirement fund for police officers and fire fighters. To encourage the District government to control disability retirement costs, these payments must be reduced when the disability retirement rate exceeds a certain limit. GAO concludes that no reduction is required in the fiscal year 1994 federal payment to the fund.
Because of the Pension Benefit Guaranty Corporation's (PBGC) considerable progress in improving its internal controls, GAO is for the first time able to express an opinion on PBGC's financial statements. In GAO'S view, PBGC's financial statements for fiscal years 1992 and 1991 present fairly PBGC's financial position, except for the Multiemployer Fund's liability for future financial assistance. In that case, a scope limitation precluded GAO from making a determination about whether the reported liability was presented fairly. PBGC's internal controls did not guarantee that PBGC properly recorded, processed, and summarized financial transactions for its financial statements and other reports. Internal
Fiscal Year 1993 GAO Reports on Issues
Primarily Affecting Older Americans
Financial Management:
Estimate of Interest on
Selected Benefits Received
by Postal Service Retirees
(GAO/AIMD-93-11, July 29,
controls as of September 1992, however, reasonably ensured that assets were safeguarded against loss and that transactions were executed in accordance with management's authority and with laws and regulations. This report includes GAO's recommendation to improve PBGC's internal controls and discusses (1) GAO's concerns about the long-term viability of the Single-Employer Fund, (2) the reliability of the Multiemployer Fund's liability for future assistance, and (3) weaknesses in employee benefit plan audits and reports.
The Postal Service is required to reimburse the government for some
cost-of-living adjustments (COLA) and health benefits that Postal Service
retirees received during fiscal years 1972-90. GAO estimated a total of
$1,728.5 million in interest on the amount that the Postal Service is
required to pay $782.5 million higher than the amount in the President's
1994 budget proposal. The estimates differed because of the choice of
interest rates and the principal balances used in the calculations. For the
period covered by the calculations, GAO's interest rates averaged about
9 percent annually for COLAS and about 8 percent annually for health
benefits, whereas the President's proposal used a 5-percent figure to
calculate amounts. GAO applied its calculated interest rates to the
$2.1 billion in the 1990 Omnibus Reconciliation Act, while the amount in
the budget relied on the $3 billion figure that the administration had
calculated.
Long-Term-Care Case
Management: State
Experiences and
Implications for Federal
Policy (GAO/HRD-93-52,
Apr. 6, 1993)
The number of Americans age 65 and older is rising steadily and could
exceed 52 million by 2020. Older people require more health and social
services but are often confused about how to obtain them. Case
management helps people define their service needs, locates and arranges
for services, and coordinates the services of multiple providers. Congress
has recently considered several bills dealing with long-term care; some of
this legislation has proposed establishing a network of case managers to
integrate long-term-care services and ensure that beneficiaries receive
necessary care and support. This report discusses (1) what, in practice,
constitutes case management; what roles case managers play; and what
barriers they face in doing their jobs and (2) whether standards for case
managers would best be defined in terms of professional qualifications,
the functions of case management, or performance measures based on the
experience of state officials and outstanding case managers.
Fiscal Year 1993 GAO Reports on Issues
Primarily Affecting Older Americans
Lump-Sum Retirements
(GAO/GGD-93-2R, Oct. 20,
Older Americans Act:
Eldercare Public-Private
Partnerships
(GAO/PEMD-93-20, Apr. 16,
GAO evaluated the impact of increased federal employee retirement at the end of 1990 due to the suspension of the lump-sum retirement benefit. GAO found that: (1) the pattern of retirements for 1989 and 1990 were similar, except that the largest number of monthly retirements occurred in November of 1990, compared to December of 1989, because many employees retired earlier in the fiscal year than they originally had planned to; (2) the difference between the December 1989 rate of retirement and the November 1990 rate was 0.25 percent, but both were less than
1 percent of the full-time work force; (3) although on a calendar year basis an increase in retirements occurred, no increase showed on a fiscal year basis; and (4) agencies appeared to have no significant reductions in staffing, because new hires outpaced retirements.
Shrinking resources and growing demands have led to contractual
relationships between area agencies on aging and private corporations.
The agencies provide eldercare services to private employers under these
public-private partnerships. These arrangements have been criticized on
the grounds that preference should be given to older individuals with the
greatest economic and social needs, with particular attention given to
low-income minority individuals. GAO found that by 1991-92, only a small
portion of agencies had actually entered into public-private partnerships.
Most of the agencies with such partnerships were not generating enough
profits through these arrangements to finance significant amounts of
additional services. Moreover, agencies with partnerships reported
typically using existing staff to provide services to those referrals they
received. Among the 31 agencies that reported both income and cost data
for eldercare services provided in 1991, the median net profit was $0.
GAO summarized this report in testimony before Congress; see: Older
Americans Act: Eldercare Partnerships Generate Few Additional Funds for
Public Services, by Eleanor Chelimsky, Assistant Comptroller General for
Program Evaluation and Methodology, before the Subcommittee on
Human Resources, House Committee on Education and Labor
(GAO/T-PEMD-93-4, May 27, 1993).
Fiscal Year 1993 GAO Reports on Issues
Primarily Affecting Older Americans
Pension Plans: Hidden
Liabilities Increase Claims
Against Government
Insurance Program
(GAO/HRD-93-7, Dec. 30,
1992)
The federal government's exposure to unfunded liabilities in private pension plans is much larger than the plans have indicated on their annual reports to the Internal Revenue Service. When a pension plan terminates with insufficient assets, the Pension Benefit Guaranty Corporation (PBGC) is likely to absorb unfunded liabilities considerably greater than the plan reported. PBGC has few tools to control its exposure from hidden liabilities. Plan sponsors with financial difficulties know that PBGC will protect the guaranteed pensions of their workers no matter how large the unfunded liabilities in their plans. Financially troubled sponsors sometimes take actions that increase the burden on PBGC, such as raising benefits in lieu of increasing wages or failing to contribute to their plans. Although PBGC could benefit from additional tools to control its hidden liabilities, such tools impose costs on plan participants, plan sponsors, or the federal government.
Pension Plans: Labor
Should Not Ignore Some
Small Plans That Report
Violations
(GAO/HRD-93-45, Mar. 26,
In a May 1991 report (GAO/HRD-91-87), GAO revealed fund abuses in pension
plans for which the Pension Benefit Guaranty Corporation (PBGC) had
assumed responsibility. GAO indicated that both the Labor Department and
the Internal Revenue Service may not have acted on information, found in
annual reports filed by pension plans, describing violations involving asset
use and funding deficiencies. This report follows up on that work and
discusses (1) whether the agencies have identified and acted on the
information and (2) what the agencies' current procedures and practices
are for dealing with violations. IRS procedures generally are effective in
identifying pension plans, including small ones, that report funding
deficiencies and provide reasonable assurance that appropriate actions
will be taken. The Labor Department's procedures ignore some small
plans, despite indications that violations are more common among such
plans.
Pension Restoration Act
(GAO/HRD-93-7R, Dec. 18,
GAO reviewed the impact of proposed legislation which would pay
annuities to plan participants or their surviving spouses whose pension
plans terminated before the enactment of the Employee Retirement
Income Security Act, focusing on: (1) the number of pension losers or
their surviving spouses; (2) the amount of annuities and administrative
costs; (3) the impact on the Pension Benefit Guaranty Corporation's (PBGC)
solvency; and (4) implementation difficulties. GAO found that: (1) the
precise number of pension losers and their surviving spouses was
unknown, but a 1979 Department of Labor study estimated that 67,000
participants were fully vested and survived to 1979; (2) in 1992, there were
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