Oh no….can it be?
President Barack Obama’s federal budget proposal includes a concept that should send shivers up and down our spines.
Included in the budget is a proposal for a Social Security chained consumer price index (chained CPI) to guide annual increases. Essentially, what this means is that Social Security checks would increase by 0.3 percentage points less each year. Stated another way, if the chained CPI had been in place for 2013, your SS annual cola (cost-of-living-adjustment) would have actually decreased by 18%. Right. 18%. Yes, proponents of the chained CPI are using the 0.3 percentage-point-language because, well, it sounds harmless. ï¿½But, hey, let’s realize what’s truly happening.
The problem – as After Fifty Living (AFL) sees it.
The computation of the Social Security cost-of-living-adjustment (COLA) is now, and has been computed inaccurately since the inauguration of the Program. The Social Security COLA needs to reflect the reality of the persons it protects – namely, seniors. Currently, the Social Security COLA, which for 2013 was 1.7%, is based on the increase in average wages. Yet, most Social Security recipients are not average wage-earners. Most are retirees.
AFL maintains that the market basket of wage-earners differs significantly from that of retirees/seniors. And – this market basket for wage-earners is the foundation of the COLA computation.
The overall Consumer Price Index (CPI) for the 12-months ending October, 2012 was 2.2%. So, starting right out, the 1.7% COLA for Social Security recipients was inadequate. Yes, it’s true – the price of “Food” during that period increased at 1.7%. So, if food were the only necessity of Social Security recipients, all would be fine. Significantly, however, “Medical Care Services” increased at 3.9% over the period – more than double the allotted COLA, and “Medical Care Commodities” increased at 3%.
To really get a grip on the inaccuracy of the CPI being used as the basis of the COLA, we turned to the Fed’s own Bureau of Labor Statistic’s report: Vital Health Statistics – Survey, 2011. Table 16 displays the number of hospital stays, by age group, during the 12 months in 2011. Folks aged 45 on up represented 39.4% of those surveyed (age 45-64 = 26.4%; age 65+ = 13.0%). Yet, 49.6% (almost half) of all one-night hospital stays were done by those in this age group (age 45-64 = 25.1%; age 65+ = 24.5%). More serious illness incurs more expense and requires more hospital stay. A whopping 67% of all 2-night stays were incurred by those age 45+ (age 45-64 = 32.4%; age 65+ = 34.6%) and, get ready for this, 71.1% of stays of at LEAST 3 nights were incurred by those 45+ (age 45-64 = 35.69%; age 65+ = 35.2%).
So, we’ve got to raise this question: Why are Social Security recipients getting such a rotten deal – even without implementation of the chained CPI? Answer: Because you and I (Social Security recipients or about-to-become recipients) are letting them (Washington politicians) get away with it. In other words, they’re doing it to us – because they can. And we suffer in silence.
Let’s find our voices.
Contact your senator and your representative – yeah, maybe even the President, himself! ï¿½Emailï¿½a copy of this article. Tell them: “I’ve found my voice!”