According to two new government reports, the financial position of social security and Medicare, two of the most important safety net programs in the United States, will improve slightly in 2021 against the backdrop of a strong economic recovery during a coronavirus pandemic. Did.
However, both programs could reduce severance benefits for millions of retirees and limit payments to hospitals that provide care to Medicare patients if Congress does not act to strengthen Medicare patients. We continue to face a major long-term shortage.
Annual government Report The economic recovery from the 2020 recession, announced Thursday by a councilor of the government’s social security and Medicare program, said it was “stronger and faster” than expected last year’s forecast.
However, the trustee warned that the economic outlook has become more uncertain since mid-February, when the actuaries made assumptions about the current report. For now, they also assume that the pandemic does not affect the long-term solvency of the program.
Tens of millions of older Americans, including 47 million retired workers, rely on social security and Medicare to supplement their income and health care costs. However, both payroll and other tax-funded programs face shortages in the future, and legislators take little action to address this issue.
The Social Security Old-Age Insurance Trust Fund, which pays retirement benefits, will be depleted in 2034, a year later than previously predicted. At that time, the fund’s reserves will be exhausted, which means that incoming tax revenues are sufficient to cover only 77 percent of the planned profits.
This is primarily the result of demographic changes. While more baby boomers are collecting social security payments, the declining birthrate is reducing the number of workers paying taxes.
“Members have many policy options to reduce or eliminate the long-term funding shortages of social security and Medicare,” the Board of Trustees said in a summary of the report. “By taking action sooner or later, we will be able to consider a wider range of solutions, more time to step through changes, and more time for the general public to prepare. . “
The program’s disability fund outlook has also improved, and for the first time since 1983, it is not expected to be exhausted within the 75-year forecast period. In contrast, last year’s report predicted that the fund would only be able to pay the benefits scheduled until 2057. The cost and revenue of the program are so closely linked that they can have a significant impact.
Medicare Hospital Trust Fund forecasts have improved. A shortage is expected in 2028, two years behind last year’s report. This change is primarily due to improved economic forecasts, as the program is covered by payroll taxes.
According to the report, actuaries do not expect a pandemic to have a substantial long-term impact on the trajectory of Medicare spending. During the pandemic, spending on many selective services decreased, but spending on vaccines and Covid-19 treatment increased. Actuaries said they expect medical costs to return to normal within a few years. However, they pointed out that there is “significant uncertainty” about the future of virus-related spending.
“A pandemic is an example of the uncertainty inherent in forecasting healthcare funding and spending over time,” the report said.
Of course, not all Medicare is funded through a trust fund. Medicare benefits that cover doctors’ consultations and prescription drugs are covered by general tax revenues. The report predicts that spending on these programs will increase significantly over the next few years, and some current policies regarding the amount Medicare will pay doctors may need to be revised in response to rising health care costs. I said I couldn’t. future.
