The annual Social Security and Medicare trustees report has been released, and it shows that the go-broke dates for both programs have been pushed back due to an improving economy. However, officials are still warning that policy changes are needed to ensure that the programs can continue to pay full benefits to retiring Americans.
According to the report, Medicare’s hospital insurance trust fund is now projected to run out of money in 2036, five years later than previously estimated. This is due to higher payroll tax income and lower-than-projected expenses from last year. Once the fund’s reserves become depleted, Medicare would be able to cover only 89% of costs for patients’ hospital visits, hospice care, and nursing home stays or home health care that follow hospital visits.
Social Security’s trust funds, which cover old age and disability recipients, are also projected to run out of money in 2035, rather than 2034 as previously estimated. If no action is taken, Social Security would only be able to pay 83% of benefits.
Social Security Administration Commissioner Martin O’Malley called the report “a measure of good news,” but emphasized that Congress still needs to act to avoid a 17% cut to Social Security benefits.
The report also highlights the importance of these programs, as they provide a vital source of income for millions of Americans. About 71 million people receive Social Security benefits, including retirees, disabled people, and children.
In response to the report, President Joe Biden reiterated his commitment to strengthening Social Security and Medicare, and called for high-income taxpayers to “pay their fair share” to bolster funding for the benefit programs.