Stronger-than-expected economic recovery from pandemic has delayed Social Security and Medicare breakout dates, but officials warn that the current economic turmoil is putting additional pressure on retirement programs base.
The annual report by Social Security and Medicare administrators released on Thursday says the Social Security trust fund will not be able to pay full benefits from 2035, instead of last year’s 2034 estimate. previous year estimated a 2035 due date.
The expected date of exhaustion of the Medicare Trust Fund for inpatient hospital care was set back two years until 2028 from last year’s forecast for 2026.
“The economic recovery from the 2020 recession has been stronger and faster than assumed in last year’s reports, with positive effects on the projected actuarial status of trust funds in these reports,” the report states. .
President Joe Biden said in a statement that the report “shows that the strong economic recovery driven by my economic and vaccination plans has strengthened the programs on which millions of Americans depend and has put our nation in a better position. fiscal “.
Forecasters said in the report that the ongoing COVID-19 pandemic will have no net effect on its long-term projections. But they also noted that the assumptions for their latest report were made in February, before cases began to rise again nationally and inflation rose further.
Social Security pays benefits to more than 65 million Americans, mostly retirees, as well as people with disabilities and survivors of dead workers. Medicare covers approximately 64 million elderly and disabled people.
When the Social Security trust fund runs out, the government will be able to pay 80% of the scheduled benefits, according to the report. Medicare will be able to pay 90% of the total scheduled benefits when the fund runs out.
Medicare Hospital Insurance Fund revenues are expected to be higher than last year’s estimates because the number of covered workers helping to fund it and their average wages are expected to be higher.
A major source of funding is payroll taxes on income paid by employees and employers. Some 183 million people paid these taxes in 2021.
The report expects Medicare’s “Part B” premium for outpatient coverage to remain stable at $ 170.10 a month. But government officials said the projection, based on information earlier this year, did not reflect an expected drop due to an overestimation of the cost of covering Aduhelm’s Alzheimer’s treatment.
Social Security and Medicare trustees include the Secretaries of Finance, Health and Human Services and Labor, as well as the Commissioner of Social Security. Two “public trustees” are supposed to join, but these positions have been vacant since 2015.
A White House representative did not respond to an email query about whether the president intends to appoint new trustees.
The administrators’ report is an additional reminder of the US government’s financial problems, as it juggles historically high inflation, the recovery of a pandemic and the war in Ukraine.
AARP CEO Jo Ann Jenkins said the reports “send a clear message to Congress: despite the short-term improvement, you need to take action to protect the benefits that people have earned and paid for both now and long term”.
“The stakes are too high for millions of Americans who depend on Medicare and Social Security for their health and financial well-being,” he said.
This year, Social Security retirees received a 5.9% increase in benefits, the largest cost-of-living adjustment, also known as COLA, in 39 years.
Ron Thompson Jr., a 24-year-old DC resident, says this year’s rising cost of living has been “transformative” as a benefit to his family as he helps care for his grandmother. 77 years old, living. on the other side of town.
Transportation costs, which have risen due to high inflation, have made it difficult for Thompson and his mother to drive to care for his grandmother.
“We’ve all experienced high costs,” Thompson said.
Because her grandmother can pass on some of her Social Security benefits to her daughter to help her pay for gas, “the fit is a pillow my mom can rest on” while traveling to have care of Thompson’s grandmother.
A Treasury official said high inflation this year could lead to an 8% increase in profits next year.
Maya MacGuineas, chair of the Committee on a Responsible Federal Budget, said in a statement that “policymakers must put their heads in the sand and stop pretending that the funding problems of these vital programs will be fixed.”
A new report from the Congressional Budget Office states that the main drivers of GDP-related debt growth are rising interest costs and spending on Medicare and Social Security. The aging population is driving these numbers.
Charles Blahous, a senior economic adviser to former President George W. Bush and a trustee of Social Security and Medicare during the Obama administration, told The Associated Press that “the first thing that matters is to understand the baseline. it ‘s very terrible, “he said.
Blahous says not funding Social Security and Medicare under its current structure would “subject the programs to perpetual renegotiation,” with the threat of cuts or elimination of benefits in the future.
Senator Rick Scott, R-Fla., Is proposing an 11-point government plan that would require Congress to submit a proposal to adequately fund programs or possibly eliminate them.
Biden said in Scott’s plan, “This is not the way to strengthen these programs.”
“I will work with anyone willing to have an open and honest conversation about the growth of our economy, the reduction of inflation, the improvement of our fiscal position, and the strengthening of the programs on which millions of Americans depend.” said Biden.
“If we had to wait until the 2030s” to take action, Blahous said, “the annual deficit would be so big, so many times bigger that it’s impossible to understand.”
House Ways and Means President Richard E. Neal, D-Mass., Said in a statement that “Democrats will continue to fight to ensure that these essential programs remain strong, for better or for worse.”
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