WASHINGTON (AP) — The depletion dates for Medicare and Social Security’s trust funds have been advanced due to rising health care expenses and new laws impacting Social Security benefits, as per an annual report published on Wednesday.
The depletion date — the point when the programs can no longer fully cover benefits — for Medicare’s hospital insurance trust fund has been accelerated to 2033, based on the latest report from the programs’ trustees. The previous year’s report had set this date at 2036.
Additionally, Social Security’s trust funds, which provide for old age and disability beneficiaries, are anticipated to fall short of delivering full benefits starting in 2034, compared to the previous estimate of 2035. Beyond that time, Social Security would only cover 81% of the benefits.
The trustees say the latest findings show the urgency of needed changes to the programs, which have faced dire financial projections for decades. But making changes to the programs has long been politically unpopular, and lawmakers have repeatedly kicked Social Security and Medicare’s troubling math to the next generation.
President Donald Trump and other Republicans have vowed not to make any cuts to Medicare or Social Security, even as they seek to shrink the federal government’s expenditures.
“Current-law projections indicate that Medicare still faces a substantial financial shortfall that needs to be addressed with further legislation. Such legislation should be enacted sooner rather than later to minimize the impact on beneficiaries, providers, and taxpayers,” the trustees state in the report.
About 68 million people are enrolled in Medicare, the federal government’s health insurance that covers those 65 and older, as well as people with severe disabilities or illnesses.
Wednesday’s report shows a worsening situation for the Medicare hospital insurance trust fund compared to last year. But the forecasted go-broke date of 2033 is still later than the dates of 2031, 2028 and 2026 predicted just a few years ago.
Once the fund’s reserves become depleted, Medicare would be able to cover only 89% of costs for patients’ hospital visits, hospice care and nursing home stays or home health care that follow hospital visits.
The report said expenses last year for Medicare’s hospital insurance trust fund came in higher than expected.
Income exceeded expenditures by nearly $29 billion last year for the hospital insurance trust fund, the report stated. Trustees expect that surplus to continue through 2027. Deficits then will follow until the fund becomes depleted in 2033.
The report states that the Social Security Fairness Act, enacted in January, which repealed the Windfall Elimination and Government Pension Offset provisions of the Social Security Act and increased Social Security benefit levels for some workers, had an impact on the depletion date of SSA’s trust funds.
Social Security benefits were last reformed roughly 40 years ago, when the federal government raised the eligibility age for the program from 65 to 67. The eligibility age has never changed for Medicare, with people eligible for the medical coverage when they turn 65.
Nancy Altman, president of Social Security Works, an advocacy group for the popular public benefit program said in a statement that “there are two options for action: Bringing more money into Social Security, or reducing benefits. Any politician who doesn’t support increasing Social Security’s revenue is, by default, supporting benefit cuts.”
Congressional Budget Office reporting has stated that the biggest drivers of debt rising in relation to GDP are increasing interest costs and spending for Medicare and Social Security. An aging population drives those numbers.
Several legislative proposals have been put forward to address Social Security’s impending insolvency.
