The go-break dates for Medicare and Social Security have been moved out as the economy improves and estimated depletion dates alter, according to the annual Social Security and Medicare trustees report released Monday.
Nonetheless, experts caution that legislative reforms are required lest the programs become unable to provide full benefits to retired Americans.
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The current report pushed Medicare’s hospital insurance trust fund’s go-break date back five years to 2036, owing to more payroll tax revenue and lower-than-expected spending from the previous year. Medicare is the federal government’s health insurance program for adults over the age of 65, as well as those with serious disabilities or illnesses. Last year, it covered more than 66 million people, the vast majority of whom were 65 and older.
Once the fund’s reserves are spent, Medicare will only be able to cover 89% of the costs for patients’ hospital visits, hospice care, nursing home stays, or home health care that follows hospitalization.
Meanwhile, Social Security’s trust funds, which cover old age and disability users, will be unable to provide full benefits beginning in 2035, rather than the previous year’s forecast of 2034. Social Security would only be able to provide 83% of payouts.
Despite hailing the report as “a measure of good news,” Social Security Administration Commissioner Martin O’Malley told The Associated Press that Congress must still take action to prevent the projected 17% cut in people’s Social Security benefits.
Approximately 71 million people, including pensioners, disabled people, and children, receive Social Security benefits.
President Joe Biden replied to the study by declaring that “as long as I am president, I will keep strengthening Social Security and Medicare” and that he wants high-income Americans “to pay their fair share” to help fund the benefit programs.
For years, lawmakers have pushed the worrisome math of Social Security and Medicare to future generations. The federal government last changed Social Security benefits almost 40 years ago, raising the program’s qualifying age from 65 to 67. Medicare eligibility has never altered; people become eligible for medical coverage when they reach the age of 65.
According to a Congressional Budget Office assessment, the primary drivers of debt growth in relation to GDP are rising interest rates and Medicare and Social Security payments. An aging population drives these figures.
According to the new data, Medicare’s income would exceed that of the previous year because of an increase in the number of covered workers and average wages. The report also recommends reducing spending. The main reasons for this are a regulatory change that affects the calculation of Medicare Advantage rates and lower-than-expected spending on inpatient hospital and home health agency services.
Health insurers manage Medicare Advantage programs, a variation of the federal program.
The majority of American adults support raising taxes on the nation’s richest income to keep Medicare operating as it is, according to a March 2023 poll by The Associated Press-NORC Center for Public Affairs Research.
The future of Social Security and Medicare has become a major political issue as both President Joe Biden and Republican former President Donald Trump run for reelection this year.
Biden, a Democrat, has vowed to oppose any Republican-led efforts to reduce Medicare or Social Security benefits to compensate for the gap. He’s proposed hiking taxes on people making $400,000 or more each year to help fund Medicare. However, he has not made any proposals for Social Security.
In a March interview with CNBC, Trump stated that he would consider cutting Social Security and Medicare. The former president stated, “There is a lot you can do in terms of entitlements, in terms of cutting.”
Nancy Altman, president of Social Security Works, an advocacy group for the social insurance program, said Monday’s research demonstrates that “Congress should take action sooner rather than later to ensure that Social Security can pay full benefits for generations to come.”
AARP CEO Jo Ann Jenkins stated, “The stakes are simply too high to do nothing.”
According to Michael A. Peterson, CEO of the Peter G. Peterson Foundation, “the longer Congress delays change, the more complex the options become, and these programs are too vital to continue allowing them to drift toward insolvency. There are numerous measures available to strengthen Social Security and Medicare, and Congress must give greater confidence and security for the future.”
