This week, the Social Security and Medicare Trustees released their annual reports on the state of the trust funds, and one key bill gained critical support.
Trustees Release Annual Review of Trust Funds
On Wednesday, the Social Security and Medicare Trustees released their 2015 reports on the financial outlook of the two programs. At a press briefing, Treasury Secretary Jack Lew said: “Today’s reports confirm that both Social Security and Medicare are secure today and will remain secure in the years to come. Consistent with previous years, today’s reports also show that these programs are facing challenges that need to be addressed.”
The Trustees estimated that Social Security’s Old-Age and Survivors Insurance (OASI) trust fund, which funds the retirement program, will be able to pay out full benefits until 2035 – one year longer than last year’s projection. They also found that Medicare’s Hospital Insurance trust fund will remain solvent until 2030 – the same as last year’s projection – and that enrollee costs are growing at historically low levels, especially for Parts A and D.
Wednesday’s report also revealed a new projection for next year’s Social Security cost-of-living adjustment (COLA). According to the Consumer Price Index for Urban Wage Earners (CPI-W), consumer prices have been lower this year than they were last year, which means there will likely be no COLA come January. Automatic COLAs were adopted forty years ago and so far, beneficiaries have gone without annual increases only twice – in 2010 and 2011.
As a result of the COLA projection, it is expected that Medicare’s “hold harmless” policy will be applied to a majority of beneficiaries. Around 70 percent of Medicare’s current enrollees will continue paying the $104.90 Part B premium in 2016 instead of the projected $159.30 monthly rate, which will be applied to new beneficiaries and some other groups.
The report's most critical finding was that Social Security’s Disability Insurance (DI) trust fund remains in serious financial trouble. It is projected to become insolvent in 2016, and if Congress fails to take action, beneficiaries will see a 19 percent benefit cut next December. For the average disabled enrollee, that would amount to almost $200 less in monthly benefits. Each of the six Trustees urged lawmakers to reallocate the payroll tax immediately to address the program’s insolvency, and to begin considering long-term solutions that will strengthen both of Social Security’s trust funds.
TSCL will continue to monitor the state of the trust funds – especially for the DI program – and our legislative team will advocate tirelessly for fair and responsible policy solutions in the months ahead. For updates, visit our new page on Facebook.
Key Bill Gains Support
This week, one new cosponsor – Rep. Corrine Brown (FL-5) – signed on to the Social Security 2100 Act (H.R. 1391). The total is now up to sixty-four. If signed into law, H.R. 1391 would increase Social Security benefits by 2 percent, cut taxes for over 11 million seniors, increase the minimum benefit to 125 percent of the poverty line, and make COLAs more fair and accurate. It would also take measures to increase the solvency of the trust fund beyond the next seventy-five years, through the year 2100.
TSCL enthusiastically supports H.R. 1391 since it would strengthen the program without cutting benefits for seniors. We were very pleased to see support grow for it this week.