The 76 million Americans receiving Social Security benefits will see a 3.6 percent increase in 2027, reports Pankaj Agrawal for The Conversation. But, the increase, intended to adjust for inflation, is not enough. The Social Security increase does not effectively weight increases in costs for services that people receiving Social Security benefits use more than others.
People receiving Social Security benefits tend to spend more on health care and housing than the rest of the population. And, health care costs are rising faster than many other products and services. So, while the 3.7 percent increase captures price increases for the goods working people purchase, it does not capture additional increases older people and people with disabilities face.
The government adjusts Social Security benefits based on the consumer price index for working people in urban areas. It gives too much weight to clothing, transportation and eduction and too little weight to rising health care costs, as older Americans and people with disabilities use about three times more health care services than working people and spend more than twice what younger people spend on health care.
Americans with Social Security benefits end up spending about 30 percent of their Social Security checks on health care costs, including Medicare premiums, deductibles, coinsurance and copays.
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