JustCare

Tag: Medicare Trustees

  • 2022 Trustees’ report on Social Security and Medicare shows slight improvements in their finances

    2022 Trustees’ report on Social Security and Medicare shows slight improvements in their finances

    The 2022 Social Security and Medicare Trustees’ report shows slight improvements in the finances of both Medicare and Social Security.

    According to Dean Baker, senior economist at the Center for Economic and Policy Research, the Affordable Care Act helped Medicare’s finances. He says: “This is hugely important, and little appreciated. The reduced payments to private [Medicare Advantage] plans operating within the Medicare program are attributed to the Affordable Care Act (ACA) reining in health care cost growth.

    Baker finds that the current estimated shortfall for Social Security is not much greater than the projected savings to Medicare as a result of the Affordable Care Act.

    Social Security is seeing small improvements because fewer people are receiving disability benefits and the US recovered quickly from the recession caused by the COVID-19 pandemic. Consequently, Social Security’s shortfall over the next 75 years dropped to 3.42 percent of payroll from 3.54 percent of payroll.

    That said, we know that the Trump administration made it harder for people to receive Social Security disability benefits. So, Social Security’s better financial footing might stem from fewer people receiving disability benefits than should.

    Medicare’s financial footing improved in part because its spending declined. Its premiums rose substantially because the government factored in payment for an expensive Alzheimer’s drug that it ultimately decided not to cover, except in the most limited situations. The premium hike underscores the power of the pharmaceutical industry to set sky high prices at the expense of taxpayers and people with Medicare.

    According to the Trustees, the federal government is seeing higher tax income, which also helps the financial condition of Social Security and Medicare.  Social Security reserves are expected to last until 2035–a year longer than projected last year–as of now. Medicare’s Part A Hospital Insurance (HI) trust fund reserves are expected to last until 2028. That’s two years later than previously projected. Medicare’s long-term financial situation also improved slightly, with a 75-year shortfall in the Hospital Insurance Trust Fund now at .70 percent of taxable payroll, down from .77 percent.

    Even with all reserves depleted, both Medicare and Social Security will continue. Social Security could pay about 80 percent of benefits with its annual income from payroll contributions. Medicare Part A could pay about 90 percent of benefits. Medicare Parts B and D costs in addition to premiums are paid for with general revenue, so are fully funded.

    In its 2022 budget, the Biden Administration proposed closing a tax loophole that would strengthen the Medicare Part A trust fund for a long time. It would require high-income taxpayers with pass-through business income to pay the Medicare tax on self-employment income and the net investment income tax on unearned income. This additional tax money would go to the Part A trust fund.

    We now need Congress to slow down Medicare spending. It could do so through allowing Medicare to negotiate drug prices. It could also do so by ending overpayments to Medicare Advantage plans.

    We also need to strengthen Social Security through additional tax revenues. Congress should lift the cap on Social Security payroll contributions. Medicare payroll contributions are not capped, nor should Social Security contributions be.

    Here’s more from Just Care:

  • 2018 Trustees’ reports show GOP tax cuts hurt Medicare and Social Security

    2018 Trustees’ reports show GOP tax cuts hurt Medicare and Social Security

    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.

    Here’s more from Just Care:

  • No projected 2018 increase in standard Medicare premium

    No projected 2018 increase in standard Medicare premium

    [Editor’s note: Medicare 2018 premium information released, November 20, 2017.]

    The July annual report of the Medicare Trustees to Congress on the financial state of the program shows no projected 2018 increase in the standard Medicare premium, which is $134 today; indeed, the Part B premium may fall. But, two groups of people with Medicare are projected to pay a higher 2018 Part B premium. People with 2017 Medicare monthly premiums of $109 are likely to pay higher premiums in 2018 because their Social Security benefits are projected to increase. And, some people with annual incomes above $85,000 also will likely pay higher premiums because the income level for paying more than the standard 25 percent of income contribution will be adjusted downward in 2018.

    A projected 2 percent increase in people’s Social Security checks–an average monthly increase of $27.20–means that people paying the standard 2018 Medicare monthly premium of $134 will likely see a reduction in their Part B premium. But, the 70 percent of people with Medicare who have paid a lower premium because their Social Security benefits have barely increased over the last two years–people who have been paying an average monthly premium of $109–will likely see an increase in their Part B premium.

    The income adjustment for calculating the Part B premium in 2018 for people with annual incomes above $85,000 stems in part from increasing costs in Part B, which covers doctors visits, durable medical equipment, outpatient therapy and other outpatient care. In 2016, Part B spending was 2.1 percent of GDP.  The Trustees project it to increase to 3.4 percent by 2037.

    The Trustees report shows intermediate projections that in both 2018 and 2019 individuals will pay a standard monthly premium of:

    • $134.00 if their income is $85,000 or less
    • $187.50 if their income is between $85,001 and $107,000
    • $267.90 if their income is between $107,001 and $133,500
    • $348.30 if their income is between $133,500 and $160,000
    • $428.60 if their income is more than $160,001

    You can calculate the premium amounts for higher-income couples by doubling the incomes listed.

    Beginning in 2007, people with annual incomes above $85,000 (couples more than $170,000) pay Part B premiums that are far higher than people with annual incomes below $85,000. About one in 16 people with Medicare (6 percent) have annual incomes above $85,000. That percentage is projected to grow to 8.3 percent by 2019, according to the Kaiser Family Foundation.

    People with Medicare are notified of 2018 Part B premium changes in the fall, before the Medicare open enrollment period from October 15 through December 7. The annual Part B deductible is expected to remain at $183. The Medicare Part D premium is projected to drop by about $1.2o a month.

    The Medicare Trustees estimate that Part B and Part D out-of-pocket costs, including premiums and copays, account for about 25 percent of a typical individual’s Social Security benefits in 2017.

    The Medicare Trustees now project the Medicare hospital insurance trust fund (Part A of the program) to be insolvent by 2029, one year later than the Trustees projected last year. The Trustees project lower hospital insurance spending than they projected last year, because of lower inpatient hospital utilization assumptions and lower than expected spending in 2016.

    Here’s more from Just Care: