The Medicare Part B premium and deductible are poised to take another leap of 13% on January 1, 2006. Medicare beneficiaries will pay $88.50 a month in premiums, up $10.30 from $78.20. The Part B deductible will also increase from $110 to $124. This marks the fourth double-digit premium increase in a row, having grown a stunning 58% since 2002.
The 2006 Cost-Of-Living Adjustment (COLA) will increase benefit 4.1%. For retirees facing huge increases in heating oil, gas, and food prices in the wake of Gulf Coast hurricanes, the 4.1% COLA simply doesn't come close to covering costs. The growing disparity between Medicare premiums, deductibles, and the annual COLA means rising costs are taking an ever-increasing portion of Social Security benefits.
Scott Burns, who writes a personal finance column for Universal Press Syndicate, points out that, "retirees don't live on a ‘fixed income.' They live on a declining income. Continue the [Medicare] premium growth of the last five years into the next 15, and low-income workers will have lost 26 percent of the purchasing power — a disaster."
While Medicare and supplemental health insurance costs continue their upward spiral, some economists still contend that the Consumer Price Index (CPI), which the government uses to calculate the annual COLA, overstates inflation. As a result, they say, government spending on programs like Social Security, military, civil service and other retirement programs is excessive. Since 1997, Federal Reserve Chairman Alan Greenspan has repeatedly recommended that Congress should adopt a more slowly growing "chained" CPI that would cut government spending on COLAs.
TSCL, in large part through the grassroots efforts of members, was successful fending off this "Greenspan COLA Cut," at least in 2005. TSCL also made significant headway in presenting the case for more fair COLAs with Members of Congress. For the first time, legislation to provide a higher, more adequate senior COLA by basing the annual adjustment on a "senior CPI" has been introduced in both the House and the Senate.
Efforts to cut the CPI, and spending on government retirement benefits are not over yet, however. TSCL is monitoring such proposals and planning a major push in 2006 to gain support for "The Consumer Price Index for the Elderly Act," H.R.3601, that was introduced in the House by Representative Bernie Sanders (VT), and S. 275, introduced in the Senate by Maria Cantwell (WA).
Sources: "Medicare Premiums and Deductibles for 2006," CMS, September 16, 2005. "Medicare Eating Into Social Security Benefit," Scott Burns, Universal Press Syndicate, April 9, 2005. "Measuring the Economy May Not Be as Simple as 1, 2, 3," Jonathan Weisman, The Washington Post, August 29, 2005. Testimony of Chairman Alan Greenspan on The Consumer Price Index Before the Senate Finance Committee, January 30, 1997.
November 2005
