Senior benefit costs up 24%
'Health care crisis' leads to 8-year rise
By Dennis Cauchon
The cost of government benefits for seniors soared to a record $27,289 per senior in 2007, according to a USA TODAY analysis.
That's a 24% increase above the inflation rate since 2000. Medical costs are the biggest reason. Last year, for the first time, health care and nursing homes cost the government more than Social Security payments for seniors age 65 and older. The average Social Security benefit per senior in 2007 was $13,184.
"We have a health care crisis. We don't have an entitlement crisis," says David Certner, legislative policy director of the AARP, which represents seniors.
He says seniors shouldn't be blamed for the growing cost of government retirement programs.
The federal government spent $952 billion in 2007 on elderly benefits, up from $601 billion in 2000. It's the biggest function of the federal government. States chipped in $27 billion more in 2007, mostly for nursing homes.
All three major senior programs — Social Security, Medicare and Medicaid — experienced dramatically escalating costs that outstripped inflation and the growth in the senior population.
Benefits per senior are soaring at a time when the senior population is not. The portion of the U.S. population ages 65 and older has been constant at 12% since 2000.
The senior boom, however, starts big time in 2011, when the first baby boomers — 79 million people born between 1946 and 1964 — turn 65 and qualify for Medicare health insurance. The oldest baby boomers turn 62 this year and qualify for Social Security at reduced benefits.
USA TODAY used a variety of government data to calculate the cost of providing Social Security, medical benefits and long-term care to an aging population. Billions of dollars paid to non-seniors — the disabled, children and others in the programs — were removed to create an estimate that focuses exclusively on seniors.
•Medicare experienced the most explosive growth from 2000 to 2007. The Medicare prescription-drug benefit, started in 2006, accounts for about one-fourth of the increase in Medicare, which provides health benefits for people 65 and older.
•Long-term care costs per senior have declined slightly in the past three years because of a move away from nursing homes to less expensive home care.
•The cost of senior benefits is equal to $10,673 for every non-senior household.
•About 35% of the federal budget is spent on senior benefits, up from 32% in 2004.
Eugene Steuerle, a senior fellow at the non-partisan Urban Institute, notes that the full cost of senior benefits goes beyond Social Security, Medicare and Medicaid. A complete estimate would include other programs for retirees, such as military and civil servant pensions and medical benefits, he says.
The Urban Institute estimates that kids receive an average of about $4,000 per child in benefits, including the child tax credit and other indirect assistance.
Economist Dean Baker calls it "granny bashing" to focus on the cost of senior benefits. The elderly paid a designated tax for Social Security and Medicare taxes during their decades of working to support these programs when they retired, says Baker, co-director of the liberal Center for Economic Policy and Research.