Social Security and Medicare unlikely to survive the next decade, new report raises concerns
The recently published annual Social Security and Medicare trustees report warns that the financial safety nets that millions of older Americans rely on and millions of young people are counting on will run short of money to pay full benefits within the next decade.
The report forecasts that Medicare, the government-sponsored health insurance that covers 65 million older and disabled people, will be unable to pay full benefits for inpatient hospital visits and nursing home stays by 2031. Furthermore, just two years later, Social Security will not have enough cash on hand to pay out full benefits to its 66 million retirees.
This report serves as yet another prod for politicians to address the fragile financial state of the social programs, which are only expected to become more expensive in the coming years as more Americans age into eligibility for them. As such, the Trustees are recommending that Congress addresses the projected trust fund shortfalls in a timely fashion to phase in necessary changes gradually.
While there is some good news in the report, such as the fact that the forecasted go-broke date for Medicare has been moved back three years, the date for Social Security’s trust has been moved up one year earlier. On its current track, Medicare would be able to cover only 89% of costs for patients’ hospital visits, nursing home stays, and home health care starting in 2031. Similarly, Social Security will only be able to cover 77% of benefits starting in 2033.
However, Social Security’s disability trust fund is in much better shape, as it is not expected to be depleted within the next 75 years.
The future of Social Security and Medicare has become a top political talking point as President Joe Biden heads into his expected 2024 reelection campaign. Biden has vowed to rebuff any Republican-led efforts to cut Medicare or Social Security benefits to brace for the shortfall. Instead, he has pitched raising taxes on some of the country’s wealthiest people, those making $400,000 or more a year, to shore up Medicare.
On the other hand, Republican leaders say they do not intend to ax benefits either, but they have yet to coalesce behind a plan to keep the programs solvent. Last year, members of the House Republican Study Committee proposed raising the age at which someone could qualify for Social Security and Medicare.
Michael Peterson, CEO of the Peterson Foundation, has said that “if lawmakers do nothing, in less than a decade more than 70 million beneficiaries would face an automatic 23% cut, reducing the average benefit by several thousand dollars per year. We simply can’t let that happen.” Peterson has also emphasized the need for timely action to ensure the future of Social Security.
Lawmakers have for years kicked Social Security and Medicare’s troubling math to the next generation. Social Security benefits were last reformed 40 years ago when the federal government raised the eligibility age for the program to 67. The eligibility age has never changed for Medicare, with people accessing the medical coverage when they turn 65.
In light of the report, the funds’ future should be a top priority for Congressional leaders. AARP CEO Jo Ann Jenkins has called on elected officials to hammer out a plan, stating that “today’s Social Security and Medicare Trustees reports reinforce that while they are financially strong today, both programs face long-term funding needs, and Congress must act to find solutions to ensure Social Security and Medicare will be there for the next generation and into the future.”
