WASHINGTON — This year’s reports from the trustees of Social Security and Medicare highlight the need for substantial reforms to both programs that can put them on sustainable paths while protecting other government priorities in the coming years, according to The Concord Coalition.
“Once again, the trustees have made clear that without any changes, Social Security and Medicare will continue to claim ever-larger parts of the federal budget as other important federal programs are squeezed down to historic lows,” said Concord Coalition Executive Director Robert L. Bixby.
“Unfortunately,” he added, “President Trump has chosen to generally exempt these two large programs from any changes while proposing major cuts to much smaller ones that aren’t growing as fast. This new report, signed by members of his own administration, should prompt him to reconsider the need to put Social Security and Medicare on more responsible paths.”
Today’s reports confirm that Social Security and Medicare Part A (Hospital Insurance) will experience significant and growing cash deficits in the future as they pay out more than they receive from their designated payroll taxes.
In addition, general revenues are also required to support Medicare Part B, which provides various medical services, and Part D, while helps pay for medicine. By design, the premiums that older Americans pay for these parts of Medicare only cover a fourth of the costs.
According to the trustees, the general revenue subsidies for Social Security and Medicare will total $311 billion in 2017 — $27 billion for Social Security and $284 billion for Medicare. By 2027, the general revenue subsidy for both programs combined jumps to $971 billion.
The rising costs can be attributed to large numbers of retiring baby boomers, the lengthening American lifespan, and the continuing growth of health care costs. All this means the government must pay more each year just to provide the same level of services to more beneficiaries.
The trustees’ projections on how long the Medicare and Social Security trust funds will remain solvent often receive considerable public attention. Today’s reports say the Social Security trust funds will be exhausted in 2034, the same as last year’s report, while Medicare’s Hospital Insurance fund will be exhausted in 2029, one year later than projected last year.
It is important to remember, however, that the trust funds are merely internal government accounting mechanisms that do not provide meaningful information about these two programs’ sustainability as their growth puts increasing pressure on the overall federal budget.
“Ignoring the demographic facts won’t make them go away,” Bixby said. “Congress and the president have spent a great deal of time this year on less important issues, and so far have little to show for it. Let’s hope the trustees’ new reports help at least some policymakers shift their priorities. The longer we wait to take action, the more difficult the necessary changes will be.”
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 concordcoalition.org and follow us on Twitter: @ConcordC