Inflation Indexation in Major Federal Benefit Programs: Impact of the Chained CPI

Concern over large federal budget deficits has led to proposals to change the way the federal government measures inflation in federal benefits programs and the tax code. Using the chained CPI (sometimes referred to as the superlative CPI) instead of the currently used CPI measure would reduce the rate of inflation used in numerous provisions of federal benefits programs, and would have far-reaching effects on beneficiaries. While the impact of the chained CPI on Social Security benefits for retirees and the disabled has been widely discussed, less attention has been paid to the chained CPI’s impact on other groups, such as veterans and low-income families. 

This Fact Sheet discusses how using the chained CPI would affect Social Security beneficiaries, as well as beneficiaries of other programs such as Supplemental Security Income, Medicaid, Medicare, veterans’ retirement and disability programs, and poverty-prevention programs.