Am I wrong that Obama's chained CPI proposal exempts the bottom 20% of seniors?

[Tom Rinaldo]

40. Inflation is measured by weighing a mixed "market basket" of typical expenditures

The formulas measure price movements in a broad range of categories. Stuff like food, heating , transportation, housing, education, clothing, medical expenses, durable goods etc. etc. though those categories are often broken down further. There is no one magic objective measure of inflation because the variables all keep shifting, and not always in the same direction and not always at the same rate. So even though economists might "agree" using one formula for example, that inflation increased by 2.1% one year, for some individuals it might actually have fallen by .1% and for others it could have gone up by 4%.

On an individual basis the percentage of our incomes that we each spend on gas for our cars can vary wildly. The actual amount that we spend on gas doesn't vary all that much for a working class individual or someone who is wealthy. A working class guy might commute to work while a wealthy guy might work from home for example. So if gas prices spike and that variable is going up faster than the composite average of inflation measures, for someone who spends a relatively high percentage of their income on gas, for them most likely inflation that year on a personal level will be higher than it is for someone who does not.

The same is true of health costs. If the health cost aspect of the market basket inflation rate is consistently at the high inflationary end of the range of variables that are crunched to come up with the overall inflation rate, those who have a disproportionately high percentage of their income being spent on health care costs actually confront actual personal inflation that is higher than average. The Chained CPI, it is has consistently been reported, jiggers that inflation "market basket" in a way that some say is more accurate for a generic person (others say not), but the reshuffle of weighed impacts used to arrive at inflation projections is more poorly matched to reflect the types of expenditures most seniors have to make. It does not accurately reflect for the fact that seniors spend a statistically much higher percentage of their income on health costs than does an "average American".