WASHINGTON – The 60 million people on Social Security will not receive any cost-of-living increase in their benefits in 2016, the government said Thursday, but because of a quirk in federal law, nearly one-third of Medicare beneficiaries could see record increases in their premiums unless Congress intervenes.

With millions of older Americans on fixed incomes facing that one-two punch, the Obama administration is urging Congress to moderate or stop the health insurance premium increases, which could raise the cost for some Medicare beneficiaries by about 50 percent — the largest increase, by far, in the history of Medicare. But the House’s leadership crisis could prove to be an obstacle.

Social Security has provided automatic cost-of-living adjustments in every year since 1975 with two exceptions, 2010 and 2011. But inflation was extremely low in 2015, leading to another benefit freeze, Social Security officials said. Gasoline prices, in particular, have declined sharply, holding down overall prices in the economy.

The purpose of the automatic increases is to preserve the purchasing power of Social Security benefits.
Jason Furman, the chairman of President Obama’s Council of Economic Advisers, said recently that the lack of a cost-of-living adjustment resulted from a positive economic development: “the sharp decline in energy prices that is putting more money in families’ pockets” and contributing to the economic recovery.

But that overall trend is not saving the health care sector, where costs are once again climbing with the greater use a of medical services by an aging population.

The White House could face a choice between two politically perilous options. It could authorize a big increase in Medicare premiums for those 15 million. Or it could authorize the secretary of health and human services, Sylvia Mathews Burwell, to take money from Medicare’s “contingency reserve,” which serves as a cushion in case actual spending is higher than projected. The contingency fund is already lower than the level recommended by Medicare’s actuaries.