Concord Coalition Says Trustees' Reports Show Mounting Pressure on Federal Budget From Medicare, Social Security

Press Release
Wednesday, July 22, 2015

WASHINGTON -- The Concord Coalition said today that new reports from the trustees for Social Security and Medicare show the rising pressure the programs will put on the entire federal budget in the years ahead, a problem that deserves close attention from the presidential candidates and others seeking federal office next year.

“While there have been some encouraging signs that at least some presidential candidates are prepared to discuss entitlement reforms, voters need to hear in clear and fairly specific terms what the candidates have in mind,” said Robert L. Bixby, Concord’s executive director. “This is unquestionably one of the most important problems the next president will face, and voters should expect any serious candidate to understand that.”

“After another year of procrastination in Washington, repairs to Social Security’s Disability Insurance are particularly urgent,” he added. “But with an aging population and rising health care costs, both Social Security as a whole and Medicare remain unsustainable. The trustees note once again that the longer we delay, the more difficult that task will be. Elected officials and candidates should heed that warning.”

The reports show that Social Security and Medicare Part A (Hospital Insurance) continue to pay out more than they take in from their designated payroll taxes. Their reliance on general government revenues will grow.

In addition, still more general revenues are required to subsidize Medicare Part B, which provides various medical services, and Part D, which pays for medication. While many older Americans mistakenly believe they fully pay for these parts of Medicare with their premiums, those premiums are designed to cover only a fourth of their costs.

The combined general-revenue subsidies for Medicare and Social Security will total $364 billion in Fiscal 2015, according to the trustees. Of that total, $280 billion will go to Medicare and $84 billion to Social Security.

Each year the trustees’ reports receive considerable attention for their projections on how long the Social Security and Medicare trust funds will remain solvent. Those projections, however, do not provide meaningful information about sustainability or how entitlement program growth squeezes other government priorities and pushes up federal deficits.

For the Disability Insurance Trust Fund within Social Security, even the solvency analysis provides little comfort. The trustees project that this fund will run dry by late 2016, which would trigger sharp automatic cuts in benefits for millions of disabled Americans and their dependents.

To avoid such a debacle with Disability Insurance, Congress must soon pass legislation to make at least some changes in Social Security.

“Ideally, Congress will use the need to fix the Disability Insurance shortfall as an opportunity to make broader repairs to the entire Social Security system to enable it to meet the needs of an aging population with more and more retirees,” Bixby said.

The two public trustees, who are not administration officials, are particularly emphatic about the risks of delaying broad changes to Social Security. Pointing to a projection that Social Security costs will be more than 25 percent higher than income by 2034, they warn that there is “no historical precedent for closing annual gaps of this size within the space of just a few years.”

The public trustees also draw attention to the projection that “even the total elimination of Social Security benefits for those newly eligible in 2034 would be insufficient to restore short-term financial balance. Similarly, a payroll tax increase of the magnitude needed to maintain scheduled benefits would have a profound adverse impact on the economy and employment.”

The trustees’ Medicare report shows cost projections for the next 20 years that are similar to those in last year’s report. However, the projections for the longer range are substantially lower. As the public trustees stress, this improvement depends on the continued effort among all stakeholders in the nation’s health care system to follow through on cost containment and the many strands of reforms currently being examined and undertaken across the country.

“Using Medicare policy as a prod for cost containment efforts is crucial for maintaining progress,” said Joshua Gordon, Concord’s policy director. “That is why it would be problematic to repeal the Independent Payment Advisory Board -- a mechanism for automatically furthering payment reform if health care costs were to resume rapidly increasing. The trustees suggest this mechanism might be triggered in 2017.”

“Even worse,” he added, “would be repeal of the ACA’s ‘Cadillac tax’ on high-cost health insurance, which has likely already reduced costs and is a step on the road towards limiting the inefficient and regressive tax deduction for employer-provided health insurance. Setting back the small progress we have made against health care inflation while facing a still unsustainable future makes no sense.”

Media Contact: Steve Winn, (703) 254-7828, [email protected]


The Concord Coalition is a nonpartisan, grassroots organization dedicated to fiscal responsibility. Since 1992, Concord has worked to educate the public about the causes and consequences of the federal deficit and debt, and to develop realistic solutions for sustainable budgets. For more fiscal news and analysis, visit and follow us on Twitter: @ConcordC