America’s two largest entitlement programs, Medicare and Social Security, are in fairly good financial shape in the near-term. But long-term, not much has changed: the nation’s aging population is going to wreak havoc on the programs without funding increases or benefit reductions.
So says an annual report released this year on July 28 by the Social Security and Medicare Trust Funds.
The Status of the Social Security and Medicare Programs report said Social Security “does satisfy the test for short-range (10-year) financial adequacy.” But 2027 is projected to be the year when the Social Security trust fund “fails the long-range test of close actuarial balance,” and costs will outpace reserves, although full benefits could still be paid for a few years after that.
“Today’s reports from the Social Security and Medicare Trustees,” said AFL-CIO President Rich Trumka, “have good news for all Americans: Social Security and Medicare will be there for us and our families if elected leaders listen to the American people and reject calls to cut benefits. Instead of undermining these crucial programs, we must build on their success and adopt measures to strengthen and expand them.”
The Medicare Program, the report said, has improved financially, under cost controls made possible by President Obama’s Affordable Care Act. “The projected date of HI Trust Fund depletion is 2030, four years later than projected in last year’s report,” the report said, “principally due to lower-than-expected spending in 2013 for most HI service categories.”
The report said Social Security and Medicare together accounted for 41 percent of federal expenditures in fiscal year 2013. Social Security currently provides benefits to 59 million people. An average of 10,000 Americans become eligible for Social Security every day. Baby boomers – born from 1946 to 1964 – began to reach age 62 in 2008, and there are 76 million people born during that 18-year boomer period.
“The most important lesson from the 2014 Social Security Trustees Report is that Social Security has a large and growing surplus,” said Richard Fiesta, executive director of the Alliance for Retired Americans. “Today’s report projects Social Security’s cumulative surplus to be roughly $2.8 trillion in 2014, growing to about $2.9 trillion around 2020. The report reaffirms that, without any changes, Social Security can pay full benefits until 2033 and three-quarters of benefits after that, unchanged from last year’s report.
“The Medicare Trustees report reminds us once again that the Affordable Care Act is controlling health care costs,” Fiesta continued. “It is great news that the life of the Medicare Trust Fund has been extended by another four years to 2030. Attempts to repeal health care reform would only undo the progress we have made in controlling health care costs.
“Current and future retirees must be wary of those politicians who will use today’s Social Security and Medicare Trustees reports as political cover for radical changes that would put seniors, the disabled, and the families of deceased workers at risk.”