President Biden took office in 2021 with an ambitious plan to improve the post-pandemic economy and to reduce the level of poverty among older adults. His proposals included increasing Social Security benefits, updating cost-of-living adjustments, reducing drug costs, and expanding Medicare coverage.
Unfortunately for seniors, presidential authority to improve their Social Security and Medicare benefits is limited. Presidents do not make laws. Nor do presidential interpretations of their authority always survive judicial challenges, as the Biden administration discovered when the Supreme Court overturned its plan to forgive student loan debt. A president must persuade Congress to make significant changes in existing legislation before seniors can enjoy benefit increases that the president proposes.
Even in the first two years of the Biden presidency, when his party controlled both legislative houses, Congress was less than cooperative in enacting his full economic plan. With the cooperation of Congress, the Biden administration oversaw an infrastructure law that helped jumpstart the post-pandemic economy. The Inflation Reduction Act benefitted seniors by reducing prescription drug costs. Other proposed reforms that would have helped older adults are likely to die with the change of administration in 2025.
Biden’s Proposed Benefit Increases
President Biden proposed a guaranteed minimum Social Security benefit equal to at least 125% of the federal poverty level for retirees who worked at least 30 years. The federal poverty level for a single person in 2024 is $15,060, or $1,255 per month. A benefit equal to 125% of that amount would be $1,568.75. That guaranteed minimum would be about $215 lower than the average Social Security benefit but considerably more than the $1,066.50 minimum benefit paid in 2024 to low-income workers who remained in the workforce for 30 years.
It is unlikely that seniors will see a substantial increase in the minimum benefit at any time in the near future, as assistance to low-income seniors does not seem to be a priority of the incoming administration or Congress. Biden also supported a bill that would have given a 5% benefit increase to seniors received Social Security payments for at least 20 years. A bill that introduced those and other Social Security reforms in 2023 will almost certainly die at the end of the current legislative term.
The Biden proposal would have paid for benefit increases by making wage earners pay Social Security payroll (FICA) taxes on the first $400,000 of their earnings. Currently, wage earners pay FICA taxes on the first $160,200 of their earnings. Thus, a worker who earns $160,000 per year pays FICA taxes on her full earnings while a worker who earns $320,000 a year pays FICA taxes on only half her earnings.
Unfortunately, Congress has shown little interest in protecting Social Security by correcting a tax disparity that favors high-income workers. Because Congress has not agreed upon a mechanism for funding an increase in Social Security benefits, Biden’s proposals stagnated.
COLA Increases
Social Security payments increase automatically each year to account for inflation. The increases are implemented in December each year and take effect in January. Unfortunately, those increases often lag behind the inflation rate. For example, the cost-of-living adjustment (COLA) in December 2021 was 5.9%. Yet inflation soared in 2022, forcing Social Security recipients to wait until December 2022 for an adjustment that matched current inflation. The 2022 COLA was 8.7%.
The COLA in 2023 was 3.2%. The Social Security Administration recently announced that the December 2024 increase will be 2.5%. For many seniors, a 2.5% increase will be less than the increase they have experienced in their cost of living during the last year.
The Biden administration proposed changing the way the COLA is calculated. The proposal tied the adjustment to the Consumer Price Index for the Elderly (CPI-E), a measure of inflation that places more weight on goods and services (such as healthcare costs) that are purchased by older adults. That proposal was included in the 2023 reform bill. It will need to be introduced in a future bill if Congress eventually becomes motivated to help seniors.
Drug Costs
The Inflation Reduction Act gave the Department of Health and Human Services (DHSS) the authority to negotiate lower prescription drug prices for seniors. It also capped the cost of insulin for Medicare patients at $35 and required drug companies to pay rebates to Medicare if they raise certain drug prices above the inflation rate.
Data released by DHSS suggests that these measures are helping older adults save hundreds of dollars each year on prescription drug purchases. Seniors will benefit even more in 2025 and the years that follow, assuming that the current plan to negotiate drug price reductions is not altered by the incoming Congress.
Medicare Coverage
Early in his administration, President Biden acknowledged that his hope of expanding Medicare coverage to include vision, dental, hearing care was “a reach.” Limited versions of those coverages are available through some Medicare Advantage plans, although Professor John McDonough at Harvard’s School of Public Health emphasizes the word “limited” because “it’s a lot less than people imagine.”
In recent years, the Biden administration focused on assuring the financial stability of Medicare. The administration’s proposal involved raising the cap on FICA taxes so that higher wage earners (and people who earn money though investments) will pay a fair share of Medicare costs. Since Congress has no stomach for raising taxes, Professor McDonough expects the funding issue to be kicked down the road until Congress is forced to raise taxes or reduce benefits.
(This article was updated November 2024 since it originally published July 2023.)