Social Security & Medicare Annual Reports
Today, the Social Security and Medicare Board of Trustees released their annual reports on the current and long-term financial status of the programs. They found:
The Trustees did advance the date of insolvency of the Medicare Hospital Insurance Trust Fund to 2024, but that is primarily due to a slow economic recovery. Notably, this insolvency would have occurred in 2016 if not for the Affordable Care Act.
Projected Medicare spending is down, overall, for the next ten years, due to lower than expected spending in 2010.
Projected Medicare costs over 75 years are about 25% lower because of the Affordable Care Act.
Medicare’s long-run deficit continues to be much lower than it has been in recent years due to the Affordable Care Act.
Overall, the Affordable Care Act stabilized and improved this important program that serves nearly 50 million seniors and individuals with disabilities.
At the end of 2011, 56 million people – retirees, widows, disabled workers, and children – will be receiving Social Security benefits.
Amount of annual surplus in 2011 (income from taxes and interest not needed to pay benefits or operating costs): $69 billion
Projected Trust Fund Balance for 2011: $2.7 trillion
Number of years Social Security is projected to be able to pay full benefits, without any shortfall: 25 years
Today’s report makes it clear: Social Security and Medicare are strong, but Republican economic and fiscal policies have taken a direct hit at their finances. Democrats remain committed to strengthening and preserving Medicare and Social Security, while continuing to focus on growing the economy and creating jobs.
Unlike the Republicans who voted to end Medicare as we know it, we must build on the reforms in the Affordable Care Act, which strengthened Medicare and extended its solvency without reducing benefits to our seniors.
Republicans have now voted to end Medicare while giving billions to Big Oil and millionaires. Republicans have long been up to the same tricks with Social Security, putting the economic security of America’s seniors at risk. Democrats created Social Security and Medicare; we have sustained them for generations; we are working to strengthen, not end them.
Ways and Means Ranking Member Sander Levin (D-MI):
This report makes clear just how vital health care reform is to the life of Medicare, yet Republicans continue to pursue a one-two punch against the program through their plans to turn Medicare into a voucher program and their efforts to repeal the Affordable Care Act. The deep recession has set back the solvency of Medicare and we will fight, at every step, Republican efforts to use that as justification to gut a program vital to the lives of so many Americans.
Ways and Means Health Subcommittee Ranking Member Pete Stark (D-CA):
Today’s Trustees’ report spotlights how the Medicare reforms in the Affordable Care Act are a boon to the program’s strength and solvency. To protect the health of Americans of all ages, we must defeat Republican attempts to end Medicare and gut health reform.
Energy and Commerce Committee Ranking Member Henry A. Waxman (D-CA):
The Medicare Trustees Report underscores the importance of last year’s historic health care reform law in improving and stabilizing Medicare. Provisions in the law extend Medicare for eight years beyond 2016 when it otherwise would go bankrupt. The report also shows that the Affordable Care Act’s improvements can stabilize the program while still preserving it for generations to come. This is in stark contrast to the Republican budget which would destroy the Medicare program.
Vice Chair of the Caucus and Ranking Member of the Social Security Subcommittee Rep. Xavier Becerra (D-CA):
Today’s report confirms what we already know: Social Security will weather the storm once again. Over the last seventy-five years Social Security has survived thirteen recessions and kept its promise to pay earned benefits to our seniors, disabled workers, widows and children on time and in full. This year $69 billion will be added to the trust fund, bringing the balance to $2.7 trillion, and enabling Social Security to pay workers the benefits they have earned for many years to come. You simply can’t buy the kind of retirement, disability and life-insurance protection on the private market that Social Security provides.
Facts from the Ways and Means Committee Democrats:
FACT: The Affordable Care Act Extended Solvency
Without the Affordable Care Act, Medicare’s solvency would be far worse. Were it not for the new law, Medicare would become insolvent in 2016. The ACA strengthened the program’s fiscal future, a point highlighted in the 2011 Trustees Report.
“The Financial outlook for the Medicare program is substantially improved as a result of the changes in the Affordable Care Act.” (2011 Trustees report, p. 6)
“The possibility also exists that health care in the U.S. can be transformed, in both the way that it is delivered and the manner in which it is financed. The Affordable Care Act takes important steps in this direction by initiating programs of research into innovative payment and service delivery models, such as accountable care organizations, patient-centered “medical homes,” improvement in care coordination for individuals with multiple chronic health conditions, improvement in coordination of post-acute care, payment bundling, “pay for performance,” and assistance for individuals in making informed health choices.” (2011 Trustees Report, p. 41)
FACT: Slower than Expected Economic Recovery Hurt Medicare Solvency
The slower than expected economic recovery results in a shortening of Medicare’s solvency, to 2024, down by five years from last year’s projection of 2029. Since the Medicare Trust Fund is financed by payroll taxes, lower incomes and reduced employment means less money into the Medicare Trust Fund. The effect on payroll receipts and expenditures caused by the slower than expected economic recovery results in this shortened solvency date.
“The estimated date of exhaustion is about five years earlier, due to higher real HI expenditures together with lower real payroll tax revenues” (2011 Trustees Report, p. 24)
BOTTOM LINE: American’s Aren’t Buying the Republican Plan to End Medicare
A May 4th Quinnipiac University poll found that 60 percent of Americans want Medicare to “remain as it is today, as a defined set of benefits for seniors.” That includes 57 percent of Independents, 75 percent of Democrats and 46 percent of Republicans. Americans reject the Republican plan that ends the program’s guaranteed benefit, doubles annual costs (from roughly $6,200 to $12,500) for beneficiaries by 2022, and cuts $20 trillion from federal spending by 2050 for needed medical services for senior citizens and people with disabilities.