The Health Care Impact of No Social Security COLA

Earlier this week I heard the news that there would be no cost-of-living adjustment (COLA) for Social Security payments this year. The government calculus is the Consumer Price Index (CPI), which doesn’t reflect the spending patterns of seniors, especially for health care. With parents and in-laws in their early 70s who rely on Social Security for daily expenses, I am left to wonder if anyone in Washington has had to make the kinds of choices that seniors have to make on a daily basis, including whether to buy food or needed health care. Is it right that older Americans, who have paid their dues with decades of hard work, are now “taking one for the team” because of an inappropriate formula?

Unlike some other consumer goods, the cost of prescription drugs and necessary tests and treatments continues to rise. The last time I checked, demand for those health care services is increasing as people live longer and the sheer number of elderly increases. Additionally, the housing market that would typically provide a retired couple the funding to downsize and bank the bountiful equity built over 30 to 40 years has ground to a halt. Food prices (both raw materials and prepared foods) are projected to increase 1% to 2% over 2010 – and while that may seem minimal, when it isn’t matched by a Social Security payment increase it could mean the difference between healthy eating and hunger for many of our seniors. So while “average” consumer prices may be flat, seniors’ cost of living continues to rise without support for their necessary living expenses.

What does this mean to you as a health care executive? It is quite possible that more seniors will decide not to fill some prescriptions. Others may opt out of needed physical therapy or decide that a stress test isn’t really necessary. Their inability to cover copayments at office visits could leave medical practices seeing red ink on balance sheets; we saw that happen after Medicare copayments rose. All in all, Medicare volumes in health care facilities could decline and patients may not cover outstanding bills, with the result being a major hit to operating income for health care organizations. All of this is occurring when health reform will be adding coverage to millions more Americans without a clear plan for financially supporting that worthy goal.

So, as a working executive, I’d like to take one for the team instead of my parents and in-laws. My next private sector COLA will go to my family to cover its loss of government COLA in 2010.

As a nation, instead of covering more people when we have a huge national debt, deficits far into the future and no clear plan for closing the budget gap, perhaps we can find a way to put money into the bank accounts of organizations that provide care to millions of sick and dying Americans every day, regardless of their ability to pay. Our hospitals, clinics and medical practices are no different than our elderly parents and grandparents, who raised generations of young people, served our country in wars and served their communities, often without payment.

Until someone else takes one for the health care team, executives need to watch their volumes, drive high-margin service lines to compensate and continue to serve their communities well. Here’s hoping that like my parents and in-laws, there will always be a large family around your organization when you need it most, because you have been there for us when we needed you.

Read Debbie’s full profile.