Medicare and Social Security go-broke dates are pushed back in a ‘measure of good news’
WASHINGTON — The Medicare and Social Security bankruptcy dates have been postponed as an improving economy contributed to changed expected depletion dates, the Social Security and Medicare trustees’ annual report showed Monday.
Still, officials warn that policy changes are needed or the programs will be unable to pay full benefits to retired Americans.
The date when Medicare declared bankruptcy of its hospital insurance trust fund was pushed back five years to 2036 in the latest report, thanks in part to higher payroll tax revenues and lower-than-expected spending last year. Medicare is the federal government’s health insurance program that covers people age 65 and older and those with serious disabilities or illnesses. Last year, more than 66 million people were involved, most of whom were 65 years and older.
Once the fund’s reserves are depleted, Medicare would only be able to cover 89% of the costs for patients’ hospital visits, hospice and nursing home stays, or home care after hospital visits.
Meanwhile, Social Security trust funds – which cover the elderly and disabled – will be unable to pay full benefits starting in 2035, down from last year’s estimate of 2034. Social Security could only pay 83% of benefits pay.
Social Security Commissioner Martin O’Malley called the report “a measure of good news” but told The Associated Press that “Congress must still take action to avoid what is now expected, in the absence of their action, to be a will be a disaster. % reduction in people’s social security benefits.”
About 71 million people – including retirees, disabled people and children – receive social security benefits.
President Joe Biden responded to the report by saying that “as long as I am president, I will continue to strengthen Social Security and Medicare,” adding that he wants high-income taxpayers to “pay their fair share” to fund the strengthen benefit programs. .
For years, lawmakers have been kicking the troubling math of Social Security and Medicare down to the next generation. Social Security benefits were last reformed about 40 years ago, when the federal government raised the age of eligibility for the program from 65 to 67. The age of eligibility for Medicare has never changed, at which people qualify for medical coverage when they turn 65.
Reports from the Congressional Budget Office state that the biggest drivers of the increase in debt-to-GDP ratios are rising interest costs and Medicare and Social Security spending. An aging population is driving these numbers.
The new report predicts that Medicare incomes will be higher than last year because the number of covered workers and average wages will be higher. The report also notes that spending should decline. That’s mainly due to a policy change in how Medicare Advantage rates are accounted for and lower-than-expected spending on inpatient hospitals and home health care services.
Medicare Advantage plans are a version of the federal health insurance program.
A March 2023 poll by the Associated Press-NORC Center for Public Affairs Research shows that most American adults oppose proposals that would cut Medicare or Social Security benefits, and a majority favor raising taxes on the highest the nation’s earners to keep Medicare running. is.
The future of Social Security and Medicare has become a major political talking point as President Joe Biden and Republican former President Donald Trump both campaign for re-election this year.
Biden, a Democrat, has vowed to reject any Republican-led efforts to cut Medicare or Social Security benefits to make up for the shortfall. He has proposed raising taxes on people making $400,000 or more a year to support Medicare. However, he did not offer a Social Security plan.
Trump indicated in an interview with CNBC in March that he would be open to cuts to Social Security and Medicare. The former president said: “You can do a lot in terms of rights, in terms of cuts.”
Nancy Altman, president of Social Security Works, an advocacy group for the Social Insurance program, said Monday’s report shows that “Congress must act sooner rather than later to ensure that Social Security can pay full benefits for generations to come.”
AARP CEO Jo Ann Jenkins said, “the stakes are simply too high to do nothing.”
Michael A. Peterson, CEO of the Peter G. Peterson Foundation, said “the longer Congress delays reforms, the more challenging the options become, and these programs are too important to allow them to descend into insolvency. There are many solutions available to strengthen Social Security and Medicare, and it is critical that Congress provide greater certainty and stability for the future.
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Murphy reported from Indianapolis.