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Decision on Social Security Could Affect Health Care Costs for State’s Seniors

Some seniors on Medicare could end up paying about $120 more a month in premiums and deductibles if the Social Security Administration follows through on this week’s announcement that there will be no cost-of-living adjustment (COLA) this year, according to a California congressman.

In addition, the state could find itself picking up a tab of about half a billion dollars for many Californians who are dually eligible for Medicare and Medi-Cal, said Rep. Xavier Becerra (D-Los Angeles), the Democratic Caucus chairman in the House of Representatives and the ranking member of the House Ways & Means subcommittee on Social Security.

What happens in Social Security can have a ripple effect on other federal programs, including Medicare, he said.

“We think of it as the [Social Security] program itself, but its interaction with other programs is important,” Becerra said.

Most Social Security beneficiaries enroll in Medicare Part B, and they have the premium deducted from their Social Security checks. In years without a COLA, about 70% of beneficiaries are shielded from a Medicare premium increase. But the other 30%, including anyone newly enrolled in Medicare, will face premium increases of about 50% next year to cover the full cost of premium increases that otherwise would be spread across all beneficiaries. For those 30%, their Part B deductibles also will rise by about 50% next year. 

Becerra said that increase in premiums would be about $55 a month and the deductibles would rise by another $70 a month.

“That’s a tremendous increase for people on a fixed income,” Becerra said. “That’s real money.”

The cost-of-living adjustment is based on inflation rates, which are low this year. That’s good news, Becerra said, but the basic goods used to calculate inflation rates are different for seniors, he said. Gas prices are down, for instance, but many seniors don’t spend their money on gas.

“Their spending is far more skewed toward health care and housing,” Becerra said. “Who would have known inflation would be so low, but in this case it works against seniors.”

The other big loss could come to the state of California itself, he said.

“Our state is likely to take a half-a-billion-dollar hit on this,” Becerra said.

That’s because the state has about a million Californians who are dually eligible for Medicare and Medi-Cal, and for those people “the premiums still go up but they’re held harmless,” Becerra said. “And that means the state has to pick up that tab.”

Becerra and other lawmakers scheduled a press conference today in Washington, D.C., to lobby for a plan to protect all seniors from premium hikes related to the lack of a cost-of-living adjustment in Social Security.

“It would cost somewhere between $8 billion and $10 billion to hold everyone harmless,” Becerra said.

Rep. Doris Matsui (D-Sacramento) will be part of Thursday’s press event. She is the co-chair of the House Seniors Task Force.

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