Posted on 08/25/2009 4:34:50 PM PDT by SeekAndFind
Barack Obama already has had a tough time with seniors on the health-care reform initiative, and for good reasons. The latest news from Social Security won’t make them any happier about it. The Social Security administration has canceled cost-of-living adjustments (COLAs) for the next two years, which means the fixed income on which these seniors rely will freeze at current levels. However, their Medicare premiums will still increase, which means they will get less money over the next two years, the first declines in SSA in more than 30 years:
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.
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. …
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.”
Inflation has been low enough that the cost of living has remained flat. Canceling COLAs might make sense with that in mind, except that the SSA’s increase in premiums are predicated on inflation in health care costs. If that’s true, then the COLAs should remain in place. Right now, it looks like the government wants to eat its cake and have it, too. Even those who agree with canceling COLAs when inflation stops have to answer for the premium increases.
Why are the premiums going up? Health care costs continue to go up — but SSA’s beneficiaries all use Medicare, which is a single-payer government program. The federal government has never solved the cost problem in Medicare, but now it wants to expand it for all Americans, either now or in the future. Anyone who has paid attention to the Medicare entitlement crisis understands that the government has no ability to contain costs even within its own existing systems, and the premium increases that will slam SSA recipients will eventually become the norm for everyone in ObamaCare.
Last week, I wrote about the corrosive effect that ObamaCare would have on wage growth, and the impact that would have on solvency for SSA. The AARP has relentlessly ignored the connection between this policy and the hastened bankruptcy of a system on which their entire membership relies. Perhaps this will serve as a wake-up call to the AARP, which finally decided to get off the sidelines for this issue, but apparently only to cheerlead slightly less for the Obama administration. Meanwhile, their members get squeezed in both directions.
Sorry about the double post
You can say that again ( and you have ) :)
the headline is inaccurate.
There is no adjustment unless there is a rise in cost of living. When the numbers are run according to the formula, no adjustment upward is required. There can be no negative adjustment.
An increase is not canceled because there never was one for the period in question.
Nothing to debunk. The source clearly says that SSA beneficiaries are getting the COLA as calculated by the law passed some decades ago. That COLA is 0% (actually less than that, but 0% is as low as it goes). Most SSA beneficiaries are on Medicare and have Medicare Part B premiums deducted from their checks. The Part B premiums are increasing. So the gross payment is unchanged, but the net payment is reduced by the amount of the increase in the Part B premium. Those are the facts.
this should outrage every single senior citizen and make them mad as hell.
They should start by calling AARP and demanding immediate action.
If the AARP does not do anything, seniors should tear up their AARP cards and call AARP and cancel their memberships.
They should probably do these things anyway because of the AARP stance on Obamacare.
Perhaps senior citizens should band together and file a class action lawsuit against the US government over the Social Security issue.
“I think it is time for all of us old fogies to start calling social security and having long confused pitiful conversations with people that are endless.”
LOL!!! Did you hear the old lady at McCain’s townhall, today, screw up and call McCain “Senator Kennedy”, catch herself, giggle, and then continue, “Oh, I just gave you a promotion!”
Make sure you get her on the call list!
The COLA is calculated from the 3rd quarter of one year to the 3rd quarter of the next. Gasoline prices, the key component in the more than 5% COLA increase in the prior year, have fallen from the high three-dollar area to the mid two-dollar range, a decline of about 30%.
How come we never here that WELFARE is running out of money???
From National Review:
A Pointless Lament About COLA
The COLA is determined each year by the Social Security Administration based on observed inflation over the previous year. For example, the COLA applicable to Social Security benefits payable in January 2009 was 5.8 percent, calculated on the basis of inflation observed between 2007 and 2008.
This year, however, incoming data suggest that inflation will average about negative 5 percent. Because nominal benefit amounts will remain unchanged, retirees will experience a 5 percent increase in the purchasing power of their Social Security checks. This is expected to happen next year, too, given forecasts of continued economic sluggishness.
The complaint that seniors’ living costs are rising because they spend so much more on out-of-pocket health-care costs and premiums also rings untrue. What’s the story here? Medicare Parts A, B, and D require enrollees to pay premiums to finance a minor part of the government’s total expenditure on those benefits. According to the Centers for Medicare and Medicaid Services (CMS), the Medicare Part A premium will increase by 4.3 percent — in line with increases in the costs of inpatient hospital, skilled nursing, and other services covered under Part A. However, 99 percent of seniors do not pay Medicare Part A premiums because they are “fully insured” under Social Security.
The premium for Medicare Part B was not increased in 2009 and probably won’t increase next year despite positive health-care inflation in 2008. According to the Bureau of Labor Statistics, medical-care prices rose by 3.2 percent over the past 12 months. However, Part B’s 2009 premium was not increased because the Supplementary Medicare Insurance (SMI) trust fund presently has a “more-than-adequate” reserve. This means that, for the same premium on Medicare Part B this year and next, seniors will receive medical benefits of larger value compared with non-medical goods and services.
According to the CMS, Medicare Part D premiums will increase only slightly (by $2, on average) in 2009. However, the CMS notifies beneficiaries about how they can avoid paying more by shifting to alternative plans that provide the same or similar coverage at more competitive rates. Thus, the average cost increase per Part D beneficiary should turn out to be much smaller.
They didn't cancel the adjustments, the formula they base the adjustment on is just zero.
Since Williams takes the real numbers and adds 8%, I'd guess his numbers will be close to 8%. It's tough to sell hyperinflation when prices are falling.
I suspect you are right. It has happened before. They'll "fix" it right after blaming the faulty "system" on republicans of years past.
Or, they could have cut spending.
Excellent question!
Trust me, I KNOW she heard me. The look on her face and the silence was golden. I have a pretty good sense of discernment... and let me tell you, I think this lady was an Obama supporter and has now re thunk her position.
I remember milk and gasoline at $4 a gallon. Now gas is $2.60 and milk was $1.66 today. Quick, get your hyperinflation wheelbarrows out.
Please do not demogougue on Social Security. National health insurance is another issue, however.
Social Security is a generational Ponzi scheme. Early generations paid little payroll taxes but received increasing levels of benefits. In the mid 80s, politicians increased payroll taxes substantially to fix the program. However, the excess tax revenues were spent so there are no savings to pay for the baby boom retirement.
The cost of living increase formula has been controversial since its inception. Social Security uses an average wage index to increase benefits. Thus, Social Security benefits increased much faster than the rate of inflation. The fact that benefit increases have slowed is a positive development in one sense. Seniors have been receiving unsustainable benefit increases because of the wage indexing. In another sense, the static benefit levels are signs of future problems. It is an anomaly that wages have increased slower than inflation. In a slow or no growth economy, wages will increase slower than inflation except for protected classes (unions, government workers, and politicians). Seniors have advocated wage indexing because they wanted benefits to grow faster than inflation. However, the opposite may occur if the economy stalls.
The reason for wage indexing is not so much to placate seniors as it is to increase tax collections. Both benefits and payroll tax limits are indexed to wages. Thus politicians can enact a hidden tax increase every year on higher income earners without passing any legislation.
If AARP continues to support Dear Leader, they are going to be destroyed by their membership.
Since the geniuses in the O administration have decided that costs have NOT gone up, then congress should be pressured to cancel the increases in Medicare.
This Cola issue should not be decided at the SS level. And inflation is not correctly reported, anyway. It doesn’t take into account the entire economy, but only selected items.
And who in the world are they to cancel it for TWO years in a row? Are they from the school of prophets????
Under the old system, I understand annual inflation is running at about 5%.
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