Although the Social Security and Medicare Trustees’ 69th annual report on the program’s financial and actuarial status was released in the midst of the worst economic downturn since the Great Depression, the trustees reaffirm that the Social Security system is sound and faces no immediate danger. Despite rhetoric from Social Security alarmists and doomsday prognosticators the program continues to run large surpluses and remains capable of paying scheduled benefits in full for the next three decades. Radical changes are not necessary to bridge short-term revenue decreases or to address the program’s long-term solvency.
As expected, current economic conditions are reflected in the projected financial outlook in today’s report. The recession has had an impact on every part of the economy and the federal budget, including Social Security. The recession has marginally reduced the size of the Old-Age, Survivors, and Disability Insurance (OASDI) trust funds in the near-term, but Social Security continues to run significant surpluses to meet its projected obligations for years to come. No doubt some will use these projections to justify dramatic “reforms” such as benefit cuts and raising the retirement age, but, the Social Security system remains structurally sound.
By contrast, the trustee’s projections about Medicare’s uncertain long-term financing strengthen what is already a compelling case that Medicare faces a dramatically different situation than Social Security. The costs of the Medicare program are expected to grow fivefold over the next seventy-five years, driven in large part by surging healthcare costs, not demographics.
Medicare costs cannot be brought under control without comprehensive health care reform. We agree with the Administration that entitlement reform is health reform. We cannot solve the Medicare funding challenges without systemic changes that will bring down costs for Medicare and all other payers, including families, business and government at all levels.
Contact: Eddie Vale 202-637-5018
