By John Ballard
Merrill Goozner, Fiscal Times columnist, was a guest on today's Washington Journal. I paid close attention since he is among the best-informed experts regarding health care reform issues. Impressive CV.
Sure enough he addressed the COLA freeze for Social Security beneficiaries, pointing out that although the official metric for determining inflation may indicate otherwise, actual inflation for seniors is real as their expenses continue to increase.
As he spoke I decided to grab what he said and repost my rant from Friday. It may not do any good but it makes me feel better to get it off my chest. Again.
As a Social Security beneficiary I have a jaundiced view of the decision to have no COLA (cost of living allowance) for the second consecutive year. Yeah, I know the bump from three years ago was artificially high and that should make up for the difference, but anyone who thinks the cost of living is not going up for seniors is dreaming.
Two realities come to mind (aside from medical expenses) that have nothing to do with personal expenses. First, the economy (which now has about twenty percent of everybody getting Medicaid -- food stamps, etc., certifiably destitute) is making an increasing number of seniors pick up expenses for one or two generations not part of their job description as parents of adult children and grandparents.to their children.
And second, despite the old saying, two do not live a cheaply as one. The death of a spouse leaves one beneficiary in the place of two, but the survivor's income, widow or widower, is dramatically reduced. The grocery bill may go down slightly, but most other expenses don't change much. I don't know the mortality statistics for people over sixty-five but I doubt younger people would want to change places. For the second consecutive year, the prayer for couples receiving Social Security is simply that they both continue to stay alive at least until December, 2011.
The mechanism mandating this freeze typically works to keep Social Security amounts in line with inflation, so the last two years are exceptional.
I see no need to tinker with the formula but a on-time payout, along the lines of the $250 checks that went out last year, would improve the attitudes of lots of disappointed seniors. Since every dime of that money is likely to be spent, not saved, it can be thought of as "stimulus" money.
John, do you happen to know...
ReplyDeleteWill the monthly premium for Medicare, which is deducted up-front from Social Security checks, increase this year? I know several SS recipients who say, it sure seems like it increases every year -- by almost exactly the same amount as the COLA increase -- which leaves them tyring to live on the same amount per month they received the previous year. If the Medicare premium is scheduled to increase, do you know by how much per month?
Also, is the yearly deductible for Medicare scheduled to increase again this year?
And what about the premiums for Medicare Part D?
All excellent and important questions. And I will have to do more homework to find answers. My wife and I are currently in the process of deciding about next year's Medigap policies. Without looking, I think the medicare deduction for Part B is set by a means test but whether or not it goes up or not with COLA I don't know.
ReplyDeleteDeductibles vary from one supplemental private policy to another as well as premiums for Part D.
It's a can of worms.
Last year my wife had a Medigap policy with a monthly premium of $126.00 and I went with a Medicare Advantage plan (because my health has been historically better) for which the premium was zero!
This year we both had MA with no premium, but she had to be in hospital a week for which our portion will cost at least $1600.00. If she had renewed last year's Medigap policy the premium would have increased slightly but it would have picked up the entire hospital bill (which MA did not).
We have an appointment with an insurance rep and I have been shopping and reading online. The MA plan we have will no longer be available in this county in 2011, but we already decided to go with Medigap policies instead anyway.
Will let you know more if I find anything coherent. But I'm not optimistic.
You fail to mention that inflation, on which the COLA is based, is calculated omitting the cost of fuel and food. That is an important distinction, because costs for fuel and food are increasing sharply, they are non-discretionary spending, and they form a higher than average portion of spending for seniors living on Social Security than they do for the population at large.
ReplyDeleteOmitting these costs from the calculation of inflation is a deliberate move on the part of government to keep the reported inflation rate low. Do not be fooled by the official explanation that it is bacause those costs are "too volatile" to be included.