Yesterday, the trustees for Social Security and Medicare released their annual reports on the financial status of the two programs. As in previous years, these reports unsurprisingly show that the financial challenges facing each program are substantial and growing. But this year’s reports reveal more disturbingly that both programs’ finances have entered a newly critical period, rendering legislative action to repair their finances even more urgent than before.
The long-anticipated drawdowns of the reserves of the Medicare Hospital Insurance (HI) and combined Social Security trust funds have now begun, years earlier than previously projected. This year, for the first time since 1982, tax and interest revenue will be insufficient to cover the costs of Social Security, forcing the program to begin to draw down its trust fund assets, a situation that was not projected to occur until 2022 in last year’s trustees’ report. Medicare’s HI trust fund faces the same problem, and will also draw down trust fund assets in 2018, which was not projected to occur until 2023 in last year’s report. The HI trust fund is now projected to be depleted in 2026. Last year’s report had projected that HI would not begin drawing down its assets until 2023 and would not face depletion until 2029.
For the second consecutive year, BPC has partnered with Charles Blahous of the Mercatus Center at George Mason University and Robert Reischauer of the Urban Institute, the most recent former public trustees for Social Security and Medicare, to provide independent analysis of the programs while the public trustee positions remain unfilled.
“Lawmakers simply can no longer indefinitely postpone action to address the financial challenges of Social Security and Medicare,” Blahous said. “Both programs’ trust funds have now entered their drawdown phase, and time is running out.”
“The drawdown of Social Security and Medicare’s trust funds should serve as a wake-up call to policymakers,” Reischauer said. “The Medicare trust fund’s depletion date is now within 10 years, and action should be taken well before that date is reached.”
The board of trustees for Social Security and Medicare is supposed to include two public trustees, not of the same political party, to provide public accountability and oversight. Unfortunately, these positions have been vacant since 2015, matching the longest vacancy since the creation of public trustees.
“The public trustee positions have been vacant for far too long,” Blahous and Reischauer said. “Sadly, the failure to seat public trustees is symptomatic of a larger neglect of the financial health of these vital programs on which millions of Americans depend.”
Last month, Blahous and Reischauer issued a brief on this year’s trustees reports, highlighting expected critical information as well as potential changes in the reports’ findings when compared to 2017.