WASHINGTON, D.C.: The projected depletion dates for Medicare and Social Security have been extended due to an improving economy, according to the annual trustees report.
Despite this positive development, officials emphasize the need for policy changes to ensure the programs can continue to pay full benefits to retirees.
Medicare’s hospital insurance trust fund is now projected to be depleted by 2036, five years later than previously estimated. This extension is attributed to higher payroll tax income and lower-than-expected expenses from last year.
Medicare, the federal health insurance program for people aged 65 and older and those with severe disabilities, covered over 66 million individuals last year. Once the fund’s reserves are depleted, Medicare can only cover 89 percent of hospital visits, hospice care, and nursing home stays.
Similarly, Social Security’s trust funds, which cover old age and disability recipients, are projected to run out by 2035, one year later than last year’s estimate. At that point, Social Security would only be able to pay 83 percent of benefits. About 71 million people currently receive Social Security benefits, including retirees, disabled individuals, and children.
Social Security Administration Commissioner Martin O’Malley described the report as “a measure of good news,” but stressed that “Congress still needs to act to avoid a 17 percent cut to people’s Social Security benefits.”
President Joe Biden responded to the report by affirming his commitment to strengthening Social Security and Medicare. He emphasized the need for high-income taxpayers to contribute more to bolster these programs.
Biden has vowed to resist any efforts to cut benefits and has proposed raising taxes on individuals earning $400,000 or more annually to support Medicare. However, he still needs to present a specific plan for Social Security.
The future of Social Security and Medicare has become a significant political issue as both Biden and Republican former President Donald Trump campaign for reelection. Trump has indicated a willingness to consider cuts to these programs, while Biden has firmly opposed such measures.
A March 2023 poll by The Associated Press-NORC Center for Public Affairs Research found that most U.S. adults oppose cuts to Medicare or Social Security benefits and support raising taxes on the highest earners to maintain the programs.
Nancy Altman, president of Social Security Works, urged Congress to act promptly to ensure the sustainability of Social Security. AARP CEO Jo Ann Jenkins highlighted the high stakes involved, while Michael A. Peterson, CEO of the Peter G. Peterson Foundation, warned that delaying reform would make it more challenging to address the programs’ financial issues.
The trustees report projects higher income for Medicare due to an increase in the number of covered workers and average wages. Expenses are expected to decrease due to changes in how Medicare Advantage rates are accounted for and lower-than-expected spending on hospital and home health services.