Some changes now, more later for social security
The mammoth social security bill passed by the House on Wednesday night would touch the life of just about every US citizen. It would affect current social security recipients in relatively small ways. But young people just entering the work force would find their retirement prospects greatly altered, with their social security taxes increasing and the age at which they qualify for full benefits pushed back two years.
In addition, the bill would make major changes in the way hospitals are reimbursed by medicare, an effort intended as a first step toward reining in runaway health care costs.
The bill is a mix of revenue increases and benefit changes estimated to provide $165.3 billion to the social security trust funds through 1989 - a cash-flow increase that the recent National Commission on Social Security Reform (NCSSR) says will eliminate the system's short-term financing crunch.
The Senate began drawing up its version of the bill on Wednesday. Sen. Robert Dole (R) of Kansas said Thursday he expected to bring the bill to the Senate floor next week, and that Congress would send a final version to President Reagan by Easter.
The House legislation closely follows recommendations contained in the NCSSR's final report. It was cobbled together in January with a last-minute, bipartisan deal.
But the House went beyond the commission's efforts by approving a gradual increase in the retirement age. This move, according to congressional figures, wipes out the last bit of long-term deficit facing social security after the turn of the century.
Specifically, the biggest change in the bill for the 36 million current recipients of social security checks is the six-month postponement of cost-of-living increases. This year's cost-of-living adjustment increase would be pushed back from July 1 until Jan. 1, 1984; thereafter, all COLA hikes would occur on Jan. 1.
The American Association of Retired Persons (AARP), which opposes the bill, estimates the COLA delay would ''cost'' the average single retiree $133 this year. The average retired couple wouldn't get $222 it might otherwise have received.
''It's a repeating loss that snowballs'' over the years, grumbles Laurie Fiori, an AARP social security specialist.
The richest 8 to 10 percent of current social security recipients would also find that part of their benefit checks would be subject to income tax. Beginning in 1984, single beneficiaries whose taxable income is over $25,000 (for married couples filing jointly, the threshold would be $32,000) would be taxed on half their benefit. The money gained would be recycled back into the retirement system trust funds.
''But that provision isn't indexed to inflation,'' says Gene Kimmelman, a staff attorney for Congress Watch, ''so that's really a slow way of taxing almost every retiree,'' as average income rises over the years through the natural effects of inflation.
The legislation's most sweeping change would affect workers who are 45 or younger, and all future entrants into the US work force, by pushing back the time they can retire and receive full social security benefits.
Under this provision, the retirement age would be gradually raised from 65 to 67 between the years 2000 and 2027. Workers now 23 or younger would have to wait until age 67 for full retirement benefits.
At the same time, current workers would find their social security tax burden increasing, as already-scheduled tax increases would be moved forward. The first jump, scheduled for next January, would cost the average $21,000-a-year worker $ 1.21 a week, according to NCSSR figures.
In addition, all newly hired federal workers will find themselves members of the social security system, despite a massive lobbying effort of government employees aimed at defeating the move.
The House bill would also make major alterations in the way hospitals are reimbursed by medicare, replacing today's cost-plus payments with a new system that would pay hospitals a preset price for different types of health care.
This change is intended as a first step toward shoring up medicare's financing system. The Congressional Budget Office predicts medicare will go broke in 1987, the victim of fast-rising health care costs.
The White House estimated a similar program it proposed would save $20 billion over the next five years, though prospective payment by itself won't save medicare. Social security changes at a glance For the 36 million beneficiaries who now receive social security checks:
* Postpone this year's cost-of-living increase from July until next January.
* Tax half the Social Security check of beneficiaries whose taxable income is above a certain level. The threshold is $25,000 for individuals, and $32,000 for married couples filing jointly. For workers who are or will be paying taxes into the social security fund:
* Raise Social Security taxes next January, by moving forward already-scheduled increases.
* Gradually increase the age for receiving full Social Security benefits to 67 by the year 2027.
* Bring new federal workers and all elected politicians into the system. In addition:
* For Medicare beneficiaries, the bill would drastically change the way hospitals are reimbursed for their expenses.
* For the unemployed, the bill would extend emergency federal benefits.