The Medicare and Social Security Trustees just released their reports
on these two vital social insurance programs. More than anything, they show that the GOP tax cuts are hurting Medicare and Social Security.
The Medicare report reveals that the Part A trust fund, which is funded with workers’ payroll contributions, is now projected to face a shortfall eight years from now, 2026. The Social Security report reveals that its trust fund, which is also funded through workers’ payroll contributions, will not face a shortfall until 16 years from now, 2034, the same projection as in 2017. It should be noted, however, that over the course of the last several decades shortfall projections have never been accurate and have changed from one year to the next.
Indeed, projections this year for the Social Security disability program are that it will not face a shortfall until 2032, four years longer than projected last year.
For the record, neither Medicare nor Social Security has ever actually faced a shortfall. Sometimes, the economy improves and more workers contribute to these programs. Or, workers make higher wages, increasing contributions to these programs. And, Congress can always step in to ensure these programs are adequately funded. With Social Security, Congress would need only to lift the $128,400 cap on Social Security contributions.
Even if none of these things were to happen and the Medicare Trust Fund were to face this shortfall in 2026, it would still be able to pay out more than 90 percent of its estimated benefits. Similarly, if the Social Security Trust Fund were to face a shortfall in 2034, it would still be able to pay out 77 percent of its estimated benefits. Neither program would be insolvent.
Moreover, as Nancy Altman explains, the US can easily afford both Social Security and Medicare. The only reason we are seeing these projections from the Trustees, according to Altman, is that the Republicans have sabotaged Medicare. If Congress wanted to, it could easily expand both of these programs.
Trump and GOP initiatives are reducing the number of workers paying into Medicare and Social Security. And, their tax cuts reduce income for Medicare and Social Security. They also lower taxes on Social Security benefits. “As a whole, the law has a significant net negative effect on the financial status of the OASDI program [both retirement and disability] over the short-range projection period and a negligible net positive effect over the long-range projection period,” according to the Trustees.
As of 2019, the GOP tax cut ends the penalty on people who do not have health insurance under the Affordable Care Act, which will increase Medicare costs. More people will go without insurance pre-Medicare, now that they do not have to pay a penalty for so doing. And, that will mean that more uninsured will need hospital care, driving up hospital costs and, as a result, increasing the amount Medicare pays hospitals.
The GOP also ended the Independent Payment Advisory Board, which was designed to help ensure Medicare remained strong, keep its rate of growth down and improving quality. Without IPAB, there is no mechanism to realize these goals.
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