No Social Security COLA Causes Medicare Flap

IB#15-14

The brief’s key findings are:

  • In 2016, for only the third time in 40 years, Social Security beneficiaries are not expected to receive a cost-of-living adjustment (COLA).
  • No COLA means that Medicare Part B premiums cannot increase for most beneficiaries, so a minority has to bear the full burden of rising costs.
  • Beyond this immediate flap, a broader issue is that Medicare premium growth is not fully captured by the inflation measure used to set the COLA.
  • As a result, when Medicare premiums rise rapidly, older Americans cannot maintain their non-Medicare spending.
  • In short, even the Social Security COLA does not fully insulate older households from the erosive impact of inflation.

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