The Social Security and Medicare Board of Trustees released their financial reviews of the programs earlier this month and the news is not good. Medicare’s Trust Fund has sufficient funds to pay out full beneficiary benefits for its Hospital Insurance (Part A) for only 8 more years, until 2026. Social Security Disability Insurance (SSDI) has sufficient funds until 2032 – 14 years – to pay out its SSDI benefits, and Social Security Old-Age and Survivors Insurance has until 2034 – 16 years – to pay out its benefits. After these dates, the programs will not have the funds to pay out full benefits, causing all beneficiaries of these programs to suffer a percentage of benefit cuts, regardless of their age, income level, or how much they depend on the program. For example, in 2034 if things stay as projected, all people receiving Social Security Old-Age and Survivors Insurance will receive a 23% cut in benefits.
Why is this happening? It’s a complicated answer and trends have been heading in this direction for a while now. More than 60 million people are on Medicare, Social Security or both programs and these two programs account for about 40% of federal spending. Currently, three of the many stressors contributing to the upcoming lack of funds, include:
- The fast growth of these programs due to an aging population. According to Medicare actuaries, the number of Medicare beneficiaries is expected to grow to 87 million in 2040 from 60 million now. And the number of people receiving Social Security benefits is expected to rise to 90 million from 62 million in the same time frame.
- A decrease in the number of workers for each Social Security beneficiary. In 1960, there were about 5 workers for every beneficiary. That number declined to 3.3 in 2005 and to 2.8 in 2016. It’s projected to decline to 2.2 in 2035.
- Congress’ decision to eliminate the Independent Advisory Board last year. That board was created by the Affordable Care Act to help slow Medicare’s growth.
With more than 60 million people relying on Medicare and/or Social Security and with these numbers growing to 87 and 90 million in the not-so-distant future, making plans now to reverse these trends is imperative to the health and well being of our country’s older adults and to those younger than 65 with a disability. California Health Advocates, along with our partners state and nationwide, will continue working for the protection, strengthening and improvement of these programs. Please consider making a donation today to support our work. Your contribution helps ensure the wellbeing of our California beneficiaries for decades to come. Thank you!
