Social Security, Medicare troubles only a few years away
WASHINGTON — The Social Security system’s retiree fund will be able to fully pay scheduled benefits until 2033, one year earlier than reported last year.
The increase is due mainly to a roughly 3% downward revision of gross domestic product and labor productivity over the projection window, the Treasury Department reported Friday.
Meanwhile, Medicare’s hospital insurance trust fund, which helps pay for “Part A” inpatient hospital care, will be able to pay full benefits until 2031, three years later than last year’s projection.
“At that point, that fund’s reserves will become depleted and continuing program income will be sufficient to pay 89 percent of total scheduled benefits,” according to the annual report of the Medicare and Social Security trustees.
The findings offer a mixed bag of data from the 2023 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds. The annual report offers a detailed look at the finances of the financially troubled Medicare and Social Security programs.
The hospital fund’s long-term financial picture improved mainly because of lower expected health-care spending based on updated analysis that uses more recent data.
Social Security’s Old-Age and Survivors Insurance (OASI) Trust Fund will be able to pay 100% of total scheduled benefits until 2033, one year earlier than reported last year. The SS system’s Disability Insurance (DI) Trust Fund is estimated to pay all scheduled benefits through at least 2097, the last year of this report’s projection period.
If both funds’ projections were added together, the resulting OASDI projected fund could pay all scheduled benefits until 2034, a year earlier than reported last year, the report said.
“At that time, the projected fund’s reserves would become depleted, and continuing total fund income would be sufficient to pay 80 percent of scheduled benefits,” the report said. A change in law would be needed to combine the two funds, but that combined projection is often used to reflect the overall health of the Social Security program.
The difference between Medicare’s total outlays and its financing sources is expected to exceed 45% of outlays within 7 years, the report said. Because the same determination was made last year, it triggers a “Medicare funding warning,” requiring the president to submit legislation to Congress to address the warning within 15 days after the FY 2025 budget is submitted. It’s the sixth straight year that a Medicare funding warning has been issued.
Congress has varied and assorted options — like increasing taxes and reducing benefits — that could reduce or eliminate both programs’ long-term financing shortfalls.
“We urge Congress to consider such options for both Medicare and Social Security, like the proposal for Medicare in the President’s FY24 Budget. With each year that lawmakers do not act, the public has less time to prepare for the changes,” the report said.