Retirees across the country have
been hit with disappointing news. Not only are millions being denied of a
cost-of-living increase as a part of Social Security benefits, but there has
been an unprecedented rise in Medicare premiums.
Open
enrollment for Medicare for 2016 begins Thursday, but Congress is still searching
for ways to prevent the premium increase for 2016 Medicare recipients. Years
ago, Congress passed a “hold harmless” provision that protects Medicare recipients from having their Social Security
checks reduced if Medicare premiums rise but Social Security benefits don’t. However,
only 70% will be protected by this, meaning that the projected Medicare cost
increases must be extracted from the 30% that aren’t protected. That group
includes new beneficiaries of Medicare, federal retirees who don’t receive
Social Security payments and about 3.1 million people with higher incomes, that
is, those making more than $85,000. In addition, the states are being negatively
affected. Arizona’s Medicaid director, Tom Betlach, said the state faces $16
million in additional costs in 2016 due to the projected premium increase. “It’s
poor public policy to expect the states to cover the Medicare shortfall,” he
said.
The rise in premiums goes hand in
hand with Social Security Administration’s announcement on Thursday, which is mainly
based off the CPI, or the consumer price index. Currently, the CPI is low and
is mainly affected by the increasing gasoline production and low gas prices.
When the CPI is low, there is little incentive for Social Security benefits to increase.
The problem with this assessment of the CPI is that medical costs continually
increase yet consumer prices for many goods including food to housing have
not risen enough to increase the benefits. Groups that support retirees believe
that the CPI is a poor measure for Social Security benefits since working
people spend differently than retirees. For example, the working class tends to
spend more on gasoline, health-care, and long-term care where prices rise
faster which is excluded from the assessment of CPI. Instead, it focuses on
consumer goods such as food and housing where prices rise slowly. Advocates favor
using CPI-E (E for elderly), which would take into account the different
spending patterns. “The government needs a new approach – one that recognizes
the reality of rising costs in many areas, especially health care, that are
putting pressure on American seniors,” democratic representative Eliot Engel of
NY stated.
Democratic
staffers said a freeze or other fix to the premium increases might be considered
if an agreement isn’t reached soon.
What
do you think about the situation? Is it fair that Social Security is denying
millions of cost-of-living benefits while the Medicare premium rises? What do
you think is a possible solution to this problem?
1 comment:
I think that this will pose a major issue for many people who rely on both Social Security and Medicare to maintain a livable quality of life. Almost 1/3 of those who are on Medicare will be vulnerable to huge spikes, almost 50% in some cases, in their premiums. This is a record increase in the history of Medicare. If this is to go through, the lives of many will be altered drastically and for the worse. Supporters of the spike say that there is no need for Social Security to rise due to the decline in energy and oil prices, thus increasing the amount of money each family has. However, AARP spokesman Joshua E. Rosenblum made a good point: “People can afford to drive to the drugstore because gas prices are lower, but once they get there, they may not be able to afford their prescriptions.” The fact that there is such chaos in the House since there is still no Speaker of the House makes me skeptical that Congress will be able to halt the premium before the deadline. This issue has also become one of who should bare the brunt of the costs. Dan L. Crippen, the executive director of the governors association, said “The cost of protecting Medicare beneficiaries should be borne by the federal government rather than placed on the backs of states.” The Obama administration is urging Congress to stop or at the very least moderate these premium as a means of ensuring no American has to suffer or live with lack of health care. I believe that Congress must find a way to pull themselves together and act as it is important for people to have health care and if Medicare costs rise and Social Security benefits do not, Americans are going to suffer.
http://www.nytimes.com/2015/10/16/us/politics/medicare-premiums-social-security-cost-of-living.html
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