(Washington, DC) – Rapidly-growing Medicare premiums and out-of-pocket costs swallow more than one-third of the Social Security benefits of 33 percent of older Americans, according to a recent survey by The Senior Citizens League (TSCL). “That level of unsustainable spending is occurring more rapidly than the Medicare Trustees estimate in their latest report,” says TSCL Medicare and Social Security policy analyst Mary Johnson.
Medicare premiums and out-of-pocket costs increase several times faster than the annual rate of inflation, and the rate that the annual cost-of-living adjustment (COLA) boosts Social Security benefits. “This forces people to spend an ever-growing share of their Social Security benefits on healthcare costs over the course of their retirement,” Johnson says.
With a majority of retirees depending on Social Security for more than half of their income, significant numbers of people are carrying debt into retirement. TSCL’s survey found that one in four survey participants (25 percent) report having medical expense debt that they carried for more than 90 days.
The most recent Medicare Trustees report said that average Medicare doctor and outpatient costs were only about one-twelfth the level of average Social Security benefits in 1970. Yet Trustees estimate that the average Part B (doctors) and Part D (prescription drug) premiums and out-of-pocket costs will take about 25 percent of the average Social Security benefit in 2017. With the average Social Security benefit around $1,300, that would put the Trustees’ estimated Part B and D costs at just $325/month. Trustees say that these costs will eventually take one-third of Social Security benefits by 2090.
“ But if you think that cost estimate looks too low for a Medicare beneficiary — you are 100% correct,” says Johnson. The Trustees’ estimates don’t include all beneficiary costs,” she points out. The Trustees have not included some of the biggest costs — such as premiums for supplemental coverage (Medigap), out-of-pocket costs for Part A (hospital) expenses, or costs not covered by Medicare, such as dental and vision services and most long-term care.
How Much Will You Spend on Healthcare in Retirement?
| Portion Of Social Security Checks That Retirees Spend On Healthcare Costs | Percentage of Survey Participants Affected |
| 10% or less | 11% |
| 11%-33% | 56% |
| 34%-50% | 23% |
| 51%-99% | 7% |
| 100% or more | 3% |
Source: 2017 TSCL Senior Survey
Finding agreement on how to slow rising healthcare costs has so far been elusive for Congress. TSCL believes lawmakers would better serve their constituents’ needs by starting with an area that has broad public support— such as allowing Medicare to negotiate drug prices and by prohibiting deals that keep generic drugs off the market.
To learn more about TSCL, visit www.SeniorsLeague.org.
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With 1.2 million supporters, The Senior Citizens League is one of the nation’s largest nonpartisan seniors groups. Its mission is to promote and assist members and supporters, to educate and alert senior citizens about their rights and freedoms as U.S. Citizens, and to protect and defend the benefits senior citizens have earned and paid for. The Senior Citizens League is a proud affiliate of The Retired Enlisted Association. Visit www.SeniorsLeague.org for more information.
