Social Security and Medicare bankruptcy dates pushed back

WASHINGTON (AP) — Medicare and Social Security bankruptcy dates have been pushed back as an improving economy has helped shift projected exhaustion dates, according to the annual report of the Social Security and Social Security trustees. Medicare released Monday.

Officials nevertheless warn that policy changes are needed to prevent programs from becoming unable to pay full benefits to retired Americans.

Medicare’s bankruptcy date for its hospital insurance trust fund was pushed back five years, to 2036, in the latest report, thanks in part to higher tax revenues and lower spending than last year’s forecasts . Medicare is the federal government’s health insurance program that covers people age 65 and older as well as those with a disability or serious illness. It covered more than 66 million people last year, most of whom were aged 65 and over.

Once the fund’s reserves are exhausted, Medicare would be able to cover only 89 percent of the costs of patients’ hospital visits, hospice care, and nursing home stays or home health care that follow the visits to the hospital.

Meanwhile, Social Security trust funds – which cover old age and disability beneficiaries – will not be able to pay full benefits from 2035, while last year it was expected had estimated at 2034. Social Security would only be able to pay 83% of benefits.

Social Security Administration Commissioner Martin O’Malley called the report a “good news measure” but told The Associated Press that “Congress must still act to prevent what is now planned as being, in the absence of his action, a 17% reduction in social security benefits.

Around 71 million people – including retirees, people with disabilities and children – receive social security benefits.

Lawmakers have for years deferred the troubling math of Social Security and Medicare to the next generation. Social Security benefits were last reformed about 40 years ago, when the federal government raised the age of eligibility for the program from 65 to 67. The eligibility age has never changed for Medicare, with people eligible for health coverage starting at age 65.

A report from the Congressional Budget Office says the biggest drivers of rising debt relative to GDP are increased interest costs and spending on Medicare and Social Security. The aging of the population is at the origin of these figures.

The new report projects that Medicare revenues will be higher than last year because the number of workers covered and average wages will be higher. The report also notes that spending is expected to decline. This is due primarily to a policy change regarding how Medicare Advantage rates are considered and lower-than-expected spending for hospital and home health agency services.

Medicare Advantage plans are a version of the federal program run by health insurers.

A March 2023 poll by The Associated Press-NORC Center for Public Affairs Research shows that most U.S. adults are opposed to proposals that would cut Medicare or Social Security benefits, and that a majority supports increasing benefits. taxes the nation’s highest earners to keep Medicare running. East.

The future of Social Security and Medicare has become a major political talking point as President Joe Biden and former Republican President Donald Trump both campaign for re-election this year.

Biden, a Democrat, has pledged to reject any Republican-led effort to cut Medicare or Social Security benefits to prepare for the deficit. He proposes raising taxes on people earning $400,000 or more a year to strengthen Medicare. However, he did not propose a social security plan.

Trump, in an interview with CNBC in March, indicated he would be open to program cuts. The former president said: “You can do a lot in terms of rights, in terms of reduction.”

Nancy Altman, president of Social Security Works, an advocacy group for the Social Insurance program, said Monday’s report shows that “Congress should act as soon as possible to ensure that Social Security can pay its full benefits.” benefits to future generations.

Murphy reported from Indianapolis.