Medicare cost shifting: The next big worry for seniors

Seniors can breathe a little easier now that Social Security benefit cuts are no longer part of this year’s federal budget debate, But the other shoe hasn’t dropped in Washington. That would be Medicare cost shifting.

Last week, President Barack Obama’s administration ditched one of its worst retirement policy ideas, the “chained CPI” for Social Security cost-of-living adjustments (COLAs). But we still don’t know if the president or lawmakers will renew efforts to shift a higher share of Medicare costs to seniors as part of budget talks this year. Ideas the President and others have floated in the past include higher Part B deductibles, higher home health charges, a surcharge on Medigap policies and more premium surcharges for higher-income seniors.

Healthcare costs already eat up a sizable part of Social Security benefits for many seniors, so if Medicare out-of-pocket costs jump while COLA formulas hold steady, seniors will be taking one step forward and two steps back.

This chart, prepared by the Social Security Works coalition shows how health care has consumed a greater share of Social Security benefits over time; Thirty-seven percent of the average Social Security check went for healthcare in 2010, up from 21 percent in 1992.

SS-Works-health-care-share1

 

KFF-Medicare-spending-HH1And, if you look at overall household budgets, healthcare consumed 15 percent of total of Medicare households’ budgets in 2010, three times the portion in younger households, according to the Kaiser Family Foundation.