Social Security Payment Will Increase, as Will Medicare Bite

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Social Security Payment Will Increase, as Will Medicare BiteNY TIMESBy ROBERT PEARPublished: October 20, 2004WASHINGTON, Oct. 19 - Social Security benefits for more than 47 million Americans will increase 2.7 percent next year, the government announced Tuesday. But higher Medicare premiums will take nearly half of the increase for a typical beneficiary.The squeeze on Social Security payments reflects the fact that health costs are rising much faster than consumer prices in general.The annual cost-of-living adjustment for Social Security is based on the rise in the Consumer Price Index. Medicare premiums, by contrast, are set at the level needed to finance about one-fourth of the cost of Part B of Medicare, which pays for doctors' services and other outpatient care.Social Security officials said the average monthly cash benefit for retired workers would rise to $955 in January, from $930 this year, an increase of $25 a month.But the Bush administration announced in September that the monthly Medicare premium would rise $11.60, or 17.4 percent, to $78.20, from the current $66.60. The increase in Medicare premiums will thus take 46 percent of the increase in the average Social Security benefit for retired workers.Most elderly and disabled people have their Medicare premiums deducted from their monthly Social Security checks.William D. Novelli, chief executive of AARP, the lobby for older Americans, said, "Far too many Social Security beneficiaries will see the Social Security cost-of-living adjustment partially or completely eroded by the Medicare premium increase." For 8 out of 10 retirees, Mr. Novelli noted, Social Security is the primary source of income.Retirees, like other consumers, also face the prospect of higher heating bills this winter. Those costs, like medical costs, are increasing faster than Social Security benefits.Representative Pete Stark of California, senior Democrat on the Joint Economic Committee of Congress, said, "Nearly 13 million beneficiaries will have half or more of their cost-of-living adjustments taken away by the increase in Medicare premiums next year."In the presidential campaign, <http://www.nytimes.com/top/news/washington/campaign2004/candidates/johnfkerry/index.html?inline=nyt-per-pol>Senator John Kerry has repeatedly accused <http://www.nytimes.com/top/news/washington/campaign2004/candidates/georgewbush/index.html?inline=nyt-per-pol>President Bush of mismanaging Medicare.Campaigning on Tuesday in Wilkes-Barre, Pa., Mr. Kerry said: "For a typical senior, nearly half of this year's Social Security cost-of-living adjustment is going to be eaten away by the record rise in Medicare premiums. And for two million seniors, their entire cost-of-living increase will be completely wiped out by the higher Medicare premiums. That leaves less money for food, medicine and even an occasional gift for a grandchild."Mr. Kerry said, "That's wrong, and when I'm president, I'm going to change it."Megan E. Hauck, deputy policy director of Mr. Bush's re-election campaign, said, "It's a shame to play politics this way, scaring seniors on Social Security."Mr. Kerry asserts that Mr. Bush is responsible for the increase in Medicare premiums scheduled to take effect in January. But Mr. Bush says the premiums are set under a formula established by law, and the Bush campaign points out that Mr. Kerry, as a senator, voted for the law, in 1997.Ms. Hauck said, "No senior's Social Security check will be smaller in January than it was in December."Under federal law, the increase in the premium for Part B of Medicare is limited; it cannot be larger than the cost-of-living increase in a person's Social Security benefits.This limit does not apply to separate premiums that will be charged for prescription drug benefits when drug coverage becomes available in 2006.Senator Tom Daschle of South Dakota, the Senate Democratic leader, said that in the absence of such protection, "many beneficiaries will see their Social Security checks shrink" after 2006, as increases in Medicare premiums, for basic benefits and drug coverage, outstrip increases in Social Security benefits.The Congressional Budget Office predicts that premiums for the Medicare drug benefit, which are tied to total outpatient drug spending under Medicare, will grow much faster than the basic premium, for doctors' services and other outpatient care.http://www.nytimes.com/2004/10/20/politics/20benefit.html?th