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Retirement Planning > Social Security > Social Security Funding

5 Ways Congress Could Boost Social Security, Medicare

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The U.S. Government Accountability Office estimates that 48% of households headed by people 55 and older have no retirement savings. The coronavirus pandemic worsens the problem as people are out of work.

This problem is further complicated, according to Mary Johnson, Social Security and Medicare policy analyst for The Senior Citizens League, an advocacy group, because those who need money may take Social Security benefits before they reach their full retirement age, which permanently reduces their monthly payments.

“The question becomes how we can strengthen the retirement security of today’s retirees, while strengthening funding for both Medicare and Social Security at the same time,” Johnson said in a statement.

In 2020, the group surveyed its supporters on suggestions to help bolster the two national programs. The 617 participant results were released in late January.

1. Allow Medicare to negotiate drug prices by tying them to rates paid in other countries.

It’s well known that Canada, Britain, Japan and other industrialized countries have much lower drug prices. Most respondents — 85% — stated that tethering U.S. prices to these rates could reduce prescription drug prices for Medicare.

2. Restrict drug price hikes to the rate of inflation.

Eighty-three percent of respondents supported this proposal.

3. Prohibit “surprise medical bills.”

Legislation enacted in December limits some costs of emergency care — for example, the charge for air ambulances — but there are other major costs that threaten retirees. Eighty-two percent of respondents support limiting health care providers and insurers to accepting fees no greater than 20% above Medicare-approved rates.

4. Increase benefits and adjust the COLA formula.

Eighty-three percent of respondents agreed with the lobbying group that Congress should boost benefits by 2% (about $30 a month on average) and tie the annual COLA to the Consumer Price Index for the Elderly, which increases the weighting for medical and drug costs over the standard CPI.

5. Apply the Social Security tax to all earnings.

Currently, the tax is applied to the first $142,800 of annual earnings. About 72% of those surveyed said it should be applied to all earnings. President Joe Biden has proposed extending the payroll tax to earnings exceeding $400,000 a year.

These five steps would help strengthen Social Security and Medicare, Johnson stated.  “There are more areas of agreement from retirees of different political persuasions than many might believe,” she said.

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