Fiscal cliff woes could hurt older Montanans

As the debate in Washington rages over how to avoid the fiscal cliff before the Jan. 1 deadline, some lawmakers are using Social Security and Medicare as bargaining chips.

Among the proposals under consideration by legislative leaders is an effort to reduce the Cost of Living Adjustment or COLA that is regularly made to Social Security benefits.

Joy Bruck

The proposal on the table would change the way the COLA is calculated by moving to a chained consumer price index, or chained CPI. The proposal is complex, but the result is easy to understand — this change would cut benefits to current and near retirees across the nation by $112 billion over the next 10 years. How would that COLA change affect Montana retirees and their kids and grandkids? The math is staggering — this one seemingly small change would cut benefits to retired Montanans by almost $390 million over the next decade.

For thousands of older Montanans living on fixed incomes, the chained CPI is not the minor "tweak" that some say it is. Instead, it's a significant benefit cut that will make it harder for Montana's elderly to make ends meet.

The proposal assumes that when the cost of something you normally buy goes up, you will substitute a lower-cost item. This theory falls short since many seniors spend much of their money on prescription drugs, utilities and heath care costs that keep going up, but that don't have a lower-cost substitute. When you look at the numbers, it is easy to see how harmful this change could be.

According to the Census Bureau, Montana has a greater percentage of its citizens relying on Social Security for 50 percent or more of their income than any other state in the nation. More than 139,850 Montana seniors rely on Social Security — of those, 63.2 percent or about 88,385 Montanans count on Social Security for at least half of their income.

The average Social Security benefit paid to a retiree in Montana is $1,116 per month. This modest amount keeps more than 71,000 older Montanans out of poverty and allows many thousands more to live their retirement years independently and with peace of mind.

AARP believes Montanans have earned their Social Security by paying in every paycheck, and they deserve a thoughtful, open debate about how to strengthen the program, not a last-minute deal that will hurt seniors and their kids and grandkids.

Another harmful proposal being discussed in Washington is raising the Medicare eligibility age from 65 to 67. This proposal would take away guaranteed health coverage from younger seniors, increase costs for existing seniors and shift costs onto employers and our state.

Currently, 144,658 Montanans are enrolled in Medicare. If Congress were to raise the Medicare eligibility age, in the future about 20,470 Montanans would be left without health care coverage — forcing them into the private insurance market at considerable expense — estimated at over $2,000 per year. In addition, a Kaiser Family Foundation study concluded that removing the youngest and healthiest older Americans from the Medicare risk pool would increase premiums for those remaining in the Medicare program.

Instead of making shortsighted changes to Medicare, Washington needs to work to lower health care costs throughout the health care system.

AARP believes Montanans and all Americans deserve responsible solutions to Medicare and Social Security, not a shortsighted deal that will hurt all of us. That's why we're fighting to stop harmful cuts to Social Security and Medicare as part of a deal to pay the nation's bills. To join our fight and have your say about the future of Medicare and Social Security, go to http://earnedasay.org.

(Joy Bruck, a retired Navy officer, is AARP Montana state president.)