In 1987, while the Staff Director of the Senate Special Committee on Aging, I helped develop legislation to create a Consumer Price Index for the Elderly (CPI-E). The goal was to more accurately measure the prices and inflation seniors face, ultimately leading to more representative cost of living adjustments (COLAs) for America's retirees. Never in my wildest dreams could I have predicted that, 26 years later, our nation would still be without an accurate CPI formula for millions of seniors, and that the CPI-E would still be considered "experimental."

Since its inception, Social Security has been the foundation on which America’s retirement security rests.  It has demonstrated its strength by paying benefits without interruption in good times and bad, during periods of recession and disaster, and during recovery and healing.  The program’s strength is demonstrated yet again in this year’s Trustees Report, which reflects the resilience of the Trust Funds. The report is good news for working Americans and for seniors.

The 2013 Medicare Trustees Report shows that enactment of the Affordable Care Act has improved Medicare’s financial situation and extended the solvency of the Part A trust fund by two additional years. Provisions in the health care reform law are reducing spending while improving the quality of care for Medicare beneficiaries. This is being accomplished through new coordinated care models and incentives that reduced the rate of hospital readmissions in 2012. At the same time, millions of Medicare beneficiaries are receiving preventive screenings and wellness visits without copayments and increased help with their prescription drug costs.

As we emerge from the worst economic downturn since the Great Depression, it’s clear our nation’s retirement security programs, Social Security and Medicare, continue to do their jobs admirably by protecting millions of Americans during these troubled times.

President Obama’s 2014 budget proposal includes a plan to change the way Social Security cost-of-living adjustments, or COLAs, are calculated by adopting the “chained” consumer price index (CPI).  The National Committee has been vocal in its opposition to the chained CPI because it does not accurately measure the purchasing patterns of our elderly population.  We urge the adoption of a CPI for the elderly, or CPI-E, as a more accurate means of calculating Social Security COLAs.  An in-depth examination of the CPI-E follows.