Inflation Is In The Eye Of The Beholder

On Agust 24, 2009, the LA Times carried an AP report that Social Security payments (LA Times)  for 2010 (and maybe 2011)  won't be increased because there is no inflation, leading to a decrease in net Social Security checks because the drug benefit premiums will rise.  Sounds reasonable: no inflation, no COLA, no increase in those monthly deposits to Social Security beneficiaries.

But wait - There's more! See what the U.S. Department of Health and Human Services has to say about inflation , when it comes to the government's ability to "charge" for inflation.

"HHS Issues Rules Adjusting Penalties under the Patient Safety and Quality Improvement Rule for Inflation (Penalty Inflation)


"As required by the Federal Civil Penalties Inflation Adjustment Act of 1990 (Inflation Adjustment Act), the U.S. Department of Health and Human Services (HHS) issued both a direct final rule and a proposed rule today adjusting for inflation the maximum civil money penalty amount for violations of the confidentiality provisions of the Patient Safety and Quality Improvement Act. These confidentiality provisions are enforced by the Office for Civil Rights (OCR).

"The Inflation Adjustment Act requires HHS to adjust for inflation the Patient Safety Act’s civil money penalty amount at least once every four years, beginning from the Patient Safety Act’s date of enactment, which was July 29, 2005. These rules adjust the maximum civil money penalty amount for a violation of the confidentiality provisions of the Patient Safety and Quality Improvement Act from $10,000 to $11,000.

"The public has 30 days to comment on these rules. If no adverse comments are received, the direct final rule will go into effect 90 days after publication, and the proposed rule with be withdrawn. If, however, adverse comments are received during the comment period, the direct final rule will be withdrawn. For more information, visit the OCR web site at http://www.hhs.gov/ocr/privacy/."

While there may be a perfectly sensible reason for the penalty inflation adjustment (such as a catch-up to the time that there was inflation 4 years ago), it seems incongruous to deny Social Security beneficiaries a COLA while now imposing a COLA equivalent on government-levied penalties.