Photo by Craig Moser
There aren’t many things that 90 percent of Americans agree on, but there are at least two: Social Security and Medicare. According to public opinion, around 90 percent of Americans say they want those programs secured and maintained for the long haul.
But recent reports from the trustees of the Social Security and Medicare trust funds reminded lawmakers that the programs need a few changes in order to secure their financial outlook. On its current path, the Social Security program will run into financing problems in 2033 and thus requires some tweaks, such as modifying the payroll tax formula that finances the program. With no changes at all, after 2033 Social Security will be able to pay around 75 percent of all scheduled benefits.
Meanwhile the trust fund that finances Medicare's hospital insurance – also known as Medicare Part A – will become insolvent in 2026; if no changes are made, after that year the program will be able to pay 87 percent of hospital insurance benefits. (Medicare Parts B and D – medical insurance and prescription drugs, respectively – cannot become insolvent because they’re funded with a combination of premiums and general tax revenue.)
The good news is that the Affordable Care Act – a.k.a. Obamacare – had the effect of extending the solvency of Medicare’s hospital insurance trust fund. Current projections give the fund an additional nine years of solvency beyond the pre-Obamacare estimate. Additionally, the amount of shortfall projected over the next 75 years is less than half of what was expected before Obamacare became law.
When will lawmakers start making the changes necessary to imrpove the long-term outlook for these programs? That, friends, is the fourth and final Hot Summer Budget Battle. We'll help you get involved in this and other important budget debates with fact sheets to assist you in meeting with your legislators when they're back in their home districts this August. Stay tuned for these new resources from National Priorities Project, coming later July.