Each year the Social Security and Medicare Boards of Trustees release a report about the financial health of both Medicare and Social Security. The good news is that Medicare’s hospital insurance trust fund, which helps pay for “Part A” inpatient hospital care, could be able to pay full benefits until 2031, three years later than last year’s projection.
According to the trustees, Medicare gained three extra years of solvency compared to 2022, meaning its funding will run out in 2031.
Once the reserves from Medicare’s Hospital Trust Fund are depleted, it would only be able to cover 89 percent of the expected costs.
As reported by The Hill newspaper in Washington, the board cited the evolving impact of the COVID-19 pandemic as part of this change, and “lower health care utilization through 2032” as one of the largest reasons for this change.
In what can only be seen as a tragedy, it was the fact that older and sicker individuals died during the COVID-19 outbreak, meaning Medicare beneficiaries are expected to be healthier on average and require fewer services to be paid for.
Hospital bills represent only a fraction of total Medicare costs. The report also looked at the projected costs for covering doctors’ visits and prescription drugs.
The expected effects of the drug price negotiation provisions included in the Inflation Reduction Act are expected to contribute to substantially lower projected spending on Medicare Part D.
President Biden proposed to extend the lifetime of Medicare’s Hospital Insurance fund into the 2050s as part of his budget rollout earlier last month. The plan included proposals to lower costs for beneficiaries and impose a higher tax rate on high earners.
Unfortunately, the report on Social Security was not as good. According to the trustees, Social Security’s finances continue to deteriorate. The recent surge in inflation worsened Social Security’s finances relative to the 2022 report, leading insolvency to occur a year earlier.
Social Security is 11 years from insolvency. If it reaches that point Social Security will not be able to pay full benefits to most current retirees under the law. The Trustees project the Old-Age and Survivors Insurance (OASI) trust fund will deplete its reserves by 2033.
Including Social Security Disability Insurance (SSDI), the theoretically combined trust funds will be insolvent by 2034, when today’s 56-year-olds reach the full retirement age and today’s youngest retirees turn 73. Upon insolvency, all beneficiaries will face a 20 percent across-the-board benefit cut.
With insolvency looming, refusal to touch Social Security is an endorsement by our elected officials in Washington of a sudden 20 percent across-the-board benefit cut imposed on beneficiaries of all ages and incomes.
TSCL strongly believes that instead of playing political games and demagoguing efforts to save Social Security and Medicare, policymakers should come together and negotiate legislation that will save Social Security and Medicare. Congress must keep the promises about those programs that were made to America’s seniors and TSCL will keep fighting to make sure that happens.