|May 30, 2023|
Social Security funding crisis will arrive in 2033, U.S. projects
Medicare recipients will face automatic benefit cuts starting in 2031 and Social Security won’t be able to make full retirement payments starting in 2033 unless Congress intervenes, according to a new government report released Friday.
The latest yearly forecast serves as a warning for lawmakers on Capitol Hill — and for the public — of the fragile financial health of the federal government’s two most expensive programs, which tens of millions of seniors depend on for medical care and retirement benefits.
The report is released annually by the Boards of Trustees of the Social Security and Medicare trust funds, a body composed of top administration officials such as Treasury Secretary Janet L. Yellen and Health and Human Services Secretary Xavier Becerra.
“Lawmakers have many options for changes that would reduce or eliminate the long-term financing shortfalls,” the trustees state in the report. “With each year that lawmakers do not act, the public has less time to prepare for the changes.”
The report projects that Medicare funds will be exhausted in 2031, three years later than the trustees previously estimated, which would give lawmakers more time to address the program. The date for Social Security benefits to be exhausted, however, was moved up to 2033, or one year earlier than the trustees projected last year.
Benefits won’t stop when the programs reach insolvency, but the government will be able to pay only a portion of the amount to which people are entitled. The trustees report predicts that, starting in 2033, Social Security’s old age and survivors insurance trust fund will be able to pay 77 percent of that amount. Starting in 2031, Medicare’s hospital insurance will be able to pay 89 percent of the scheduled benefits for hospital services, the report states.
The average monthly Social Security benefit check this year is $1,827. More than 60 million people are collecting benefits now. About 65 million Americans are on Medicare, with either an original version of the program in which they can choose their own doctors and other providers of care or an increasingly popular version that relies on managed-care plans.
The report provides the latest estimate on just when the United States may reach these impasses. Medicare has become strained as higher health-care costs and an increase in the number of seniors weaken its finances, the report states. Social Security faces a similar funding crunch because of the aging of the American population.
The report said the insolvency date for Social Security was moved up because economic growth is now projected to be slower than previously estimated. The Medicare insolvency date was extended primarily because of declines in projected health-care costs “stemming from updated analysis that uses more recent data,” the report states.
Lawmakers are divided over the programs’ future. Democrats have largely argued that the programs can stay financially stable without cutting benefits through higher taxes, and President Biden released a plan earlier this year to extend the life span of Medicare by more than two decades. It would increase Medicare-specific taxes on people earning more than $400,000 and make it harder for the wealthy to avoid paying those taxes.
The White House did not release a plan for extending the life span of Social Security, though. (Source: The Washington Post)
Story Date: April 2, 2023