There was grumbling last fall when the Social Security Trustees—led by Steven Mnuchin, who is also the Secretary of the Treasury—said that the gargantuan program’s cost-of-living increase would be just 1.3% in 2021.
Advocates said it wouldn’t be enough to keep up with the true cost of living, and just days into the new year, it looks like they were right.
An analysis from GoodRx, a medical and health care services provider, calculates that 589 drugs—all but seven brand medications—now cost 4.2% more on average. That’s nearly three full percentage points more than the cost of living hike Social Security gave seniors.
Here’s the bottom line on what you can now expect to pay for the 10 most commonly prescribed drugs:
• Eliquis (6.0%)
• Jardiance (6.0%)
• Tradjenta (6.0%)
• Truvada (4.8%)
• Chantix (5.0%)
• Flovent (3.0%)
• Spiriva (6.0%)
• Premarin (5.0%)
• Humira (7.4%)
• Symbicort (3.0%)
Meantime, here are the biggest increases of other drugs:
• Marplan (14.9%)
• Cotempla XR (13.2%)
• Wavesense (13.1%)
• Neoprofen (10.0%)
• Cosmegen (10.0%)
• Desoxyn (10.0%)
• Nucynta (10.0%)
• Ryvent (9.9%)
• Onivyde (9.9%)
• Juxtapid (9.9%)
A longer list of other medications and their new prices can be found here.
“This has always been the problem,” says Mary Johnson, a Social Security and Medicare policy analyst for The Senior Citizens League, a Virginia-based nonprofit advocacy group. “Prescription drugs are the fastest-growing cost that we have in retirement. Prices are rising faster than inflation—which is what Social Security is indexed to—and this has been the case for years.”
Americans already pay the highest prices for prescription drugs in the world, Reuters reports, noting that “most other developed nations have single-payer systems in which the government negotiates drug prices for its people.”
President-elect Joe Biden has proposed letting Medicare, the federal government’s health insurance program, negotiate bulk pricing with the pharmaceutical industry. Democrats, who control the House of Representatives, have indicated support for this.
President Donald Trump campaigned in 2016 on allowing the government to negotiate lower drug prices. But once in office, he encountered opposition from other Republicans who said lower drug prices would force drugmakers to cut back on research and development of new drugs. At the time, California Rep. Kevin McCarthy, currently the top Republican in the House, warned against “opening the door to a government takeover of our prescription drug market.”
Drug prices that are rising faster than inflation is just one way that seniors are falling behind as 2021 begins.
We reported recently that Medicare reimbursement cuts of 1% to 10%, depending on the service, kicked in on New Year’s Day. It’s complicated, but essentially, here’s the deal: states—virtually all are required to balance their budgets each year—have been hammered by the coronavirus pandemic and resulting recession. Given that Medicaid spending is usually a top—if not the top—source of spending, states can be expected to slash what they give to hospitals, physicians, nursing homes and other providers.
What makes this even worse is that for every dollar the states cut from Medicaid, it means less federal aid as well. That’s because the federal government gives states money based on a percentage of how much the states are spending.
All of this, warns Joan Alker, executive director of the Center for Children and Families at Georgetown University, could “significantly reduce access to needed care.” Such access, she warns, could be particularly troubling in rural areas that have been underserved to begin with.
It’s things like these—higher prescription prices and the likelihood of reduced access to Medicare—that contribute to the scary number of $285,000. According to an annual estimate by Fidelity Investments, that’s how much the average couple retiring at 65 will likely need for health care, over the rest of their lives, beyond what Medicare/Medicaid pay.
Usually, when I write about this, people comment that they only spend a few thousand dollars a year on health care—if that—and therefore the Fidelity figure can’t possibly be right. This is a mistake.
What folks need to understand is that the vast bulk of health care spending typically comes in the latter stages of life, the last two or three years. Don’t make the mistake of assuming that what you spend on health care at age 65 or 70 is suggestive of what you’ll spend at, say, 80 or 85, if you’re fortunate enough to make it that far. Don’t underestimate this.
What’s on your mind, retirement-wise, as 2021 begins? Send your questions, comments and stories to me at RetireBetterMarketWatch@gmail.com. I try to respond to every email I get. And happy new year.