Reports: Medicare, Social Security Trust Funds Depleting
by July 23, 2015 7:56 am 155 views
Medicare’s Hospital Insurance trust fund, otherwise known as Medicare Part A, is scheduled to be depleted in 2030, Social Security’s combined funds will be depleted by 2035, and Social Security’s Disability Insurance Trust Fund will be empty in the fourth quarter of 2016, Medicare’s and Social Security’s boards of trustees said in their annual reports Wednesday.
The 2030 target date for Medicare Part A is unchanged from last year. Expenditures in that program have exceeded income each year since 2008, with $8.1 billion removed from the trust fund to cover the shortfall in 2014. Small surpluses are foreseen from 2015-2023. After that, deficits are projected to return until the trust fund is depleted in 2030. At that point, Medicare Part A’s tax income will cover only 86% of expenses in 2030 and 80% in 2050.
Other parts of Medicare – Part B, which subsidizes physician services, and Part D, which subsidizes prescription drugs, also are growing as a percentage of the gross domestic product, but their accounts are projected to remain in balance.
Medicare covered 53.8 million people in 2014 – 44.9 million of them age 65 and over, and 8.9 million of them disabled. As a whole, Medicare spent $613.2 billion in 2014, with total income of $599.3 billion.
The board projects that Medicare expenditures will increase from 3.5% of gross domestic product in 2014 to 6% by 2089. However, another scenario puts the cost of Medicare at 9% of GDP by then.
The report said savings had come from lower payments to health care providers as a result of the Affordable Care Act and the Medicare Access and CHIP Reauthorization Act, passed earlier this year. “Without fundamental change in the current delivery system, these adjustments would probably not be viable indefinitely,” the report says.
The report recommends that policymakers act to reduce Medicare’s growth “with a sense of urgency.”
“Consideration of such reforms should not be delayed,” it says. “The sooner the solutions are enacted, the more flexible and gradual they can be. Moreover, the early introduction of reforms increases the time available for affected individuals and organizations—including health care providers, beneficiaries, and taxpayers—to adjust their expectations and behavior.”
Social Security’s board of trustees also issued its annual report Wednesday. The program’s two combined funds are projected to spend more than their non-interest income this year, and more than their combined income beginning in 2020, at which point the reserves begin to deplete.
The Old-Age and Survivors Insurance Trust Fund, which serves senior citizens and their dependents and survivors, will be depleted by 2035. The Disability Insurance Trust Fund is in immediate trouble, with reserves expected to be depleted in the fourth quarter of 2016, when payments would be cut to 81% of what’s scheduled. Combined, the two funds will be depleted by 2034. At that point, payments would pay for 79% of scheduled benefits.
Social Security serves 59 million people, including 42 million retired workers and dependents, 6 million survivors of deceased workers, and 11 million disabled workers and dependents of disabled workers. About 166 million people in 2014 paid payroll taxes for Social Security, which spent $859 billion on income of $884 billion, including $98 billion in interest income.
Access the Medicaid report here. The Social Security report can be read at this link.