Millions of older people face shrinking Social Security checks next year, the first time in a generation that payments would not rise. The trustees who oversee Social Security are projecting there won't be a cost of living adjustment (COLA) for the next two years. That hasn't happened since automatic increases were adopted in 1975.Unfortunately, those who live by the COLA die by the COLA when the economy tanks. The calculation doesn't give health care as much weight as it probably should for seniors, and it wouldn't surprise me at all if the Democrats try to change that just in time for the 2010 midterms.
By law, Social Security benefits cannot go down. Nevertheless, monthly payments would drop for millions of people in the Medicare prescription drug program because the premiums, which often are deducted from Social Security payments, are scheduled to go up slightly.
"I will promise you, they count on that COLA," said Barbara Kennelly, a former Democratic congresswoman from Connecticut who now heads the National Committee to Preserve Social Security and Medicare. "To some people, it might not be a big deal. But to seniors, especially with their health care costs, it is a big deal."
Cost of living adjustments are pegged to inflation, which has been negative this year, largely because energy prices are below 2008 levels.
Advocates say older people still face higher prices because they spend a disproportionate amount of their income on health care, where costs rise faster than inflation. Many also have suffered from declining home values and shrinking stock portfolios just as they are relying on those assets for income.
"For many elderly, they don't feel that inflation is low because their expenses are still going up," said David Certner, legislative policy director for AARP. "Anyone who has savings and investments has seen some serious losses."
Tuesday, August 25, 2009
The Fizz Goes Out of the COLA
Tougher times ahead for those who rely on Social Security income:
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Michael Steele recent commentary in the WashingtonPost:
Steele promised that under the Republican health-care plan, runaway Medicare spending would continue untreated and unabated. Not only would that mean no cuts in benefits, but it would ensure that reimbursement rates to doctors, hospitals and drug companies would continue to rise faster than inflation, regardless of how much they earn or how unnecessary or wasteful the services they provide. Any effort to contain future spending growth, Republicans now believe, is nothing more than a "raid" on Medicare, the government-run health plan that Republicans were against before they were for it.
According to Steele, Republicans will also seek to outlaw "any effort to ration health care based on age." You don't have to be a lawyer like Steele to understand that would effectively make it a federal crime for any hospital to refuse a heart transplant to a 95-year-old, or for any doctor to refuse to prescribe Viagra to a sexually precocious seventh-grader. Although Steele did not indicate what the penalty would be, he did not rule out the death penalty.
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