By Mary Johnson
Here's a stark finding — 44% of seniors responding to TSCL's 2014 Annual Senior Survey say they spend more than one-third of their Social Security benefits on healthcare costs. Included in that number are 5% who report spending their entire Social Security benefit on healthcare. The findings come as a reminder that Medicare only covers a portion of seniors' medical costs. Government economists have forecast for years that the growth in healthcare costs will take an ever-increasing share of seniors' Social Security benefits over the course of their retirements. As their health changes with aging, seniors use more medical services, but healthcare costs are also growing several times faster than Social Security benefits.
Recently the Centers for Medicare and Medicaid Services offered a glimmer of hope that the situation is improving — announcing that health per capita spending for the elderly grew just 4.1 percent from 2002 to 2010 — the lowest rate among any age group studied. The estimates come from annual National Health Expenditure data, which measures healthcare spending in the United States.
But the announcement raises a lot of questions, because that data doesn't jibe with other sources of government data. For example, in 2002 as Congress was debating adding a Part D prescription benefits to Medicare, Congressional Budget Office Director Dan Crippen forecast that Medicare spending would increase about 7 percentage points through 2012 and said that, "Proposals to increase payments to providers of services in the Medicare program, or to expand the program’s benefits through prescription drug coverage, would exacerbate the long-term budgetary pressures projected for the next several decades."
Crippen's forecast turned out to be correct. According to the government's own data from the Medical Expenditure Panel Survey (MEPS), the healthcare costs of seniors 65 and older grew not 7% per year, but averaged 11% per year from 2001 through 2011. The MEPS survey doesn't include premium costs. During 2001 through 2011, Medicare Part B premiums grew on average, about 8% per year.
Although the MEPS data does show a slowing in the growth of healthcare costs during the recession, that appears to be reversing. The U.S. Commerce Department’s Bureau of Economic Analysis recently announced that healthcare spending is back on the rise, growing 9.9% in the first quarter of 2014 — the largest quarterly increase in 30 years. But while healthcare costs are showing signs of surging again, seniors are unlikely to see it in the COLA they receive next year. In fact, seniors could receive even less than the 1.5% COLA they received this year. To read more see [link to this article] "What Do You Estimate Our COLA Will Be Next Year?"
TSCL lobbies for legislation that would provide a more fair COLA by calculating it using a seniors consumer price index, like the Consumer Price Index for the Elderly. Studies for TSCL estimate that someone who retires this year with an average monthly benefit of $1,200 would receive $32,750 more over the course of a 30-year retirement using the CPI-E. By the end of ten years the CPI-E would boost monthly benefits by $39, and by more than $220 per month after 30 years.
Join TSCL's efforts for a more fair COLA. Sign a petition here.
Source: "Projections Of Medicare And Prescription Drug Spending," Dan Crippen, Director, Congressional Budget Office, Before The Committee On Finance United States Senate, March 7, 2002. "Health Costs Resume Their Rise," Sally Pipes, Forbes, May 5, 2014.
