The Social Security and Medicare trustees publish annual reports, updating the nation on the financial status of Social Security, America’s largest federal social insurance program, and Medicare, America’s largest federal health insurance program. The reports describe in detail the sizes and scopes of the financial challenges they face, and key information policymakers and the public need to understand as the futures of the programs are determined.
While critically important, the reports are dense and lengthy, combining to over 500 pages between them. Historically, much of the responsibility for communicating their key findings to busy policymakers and the public has fallen to the public trustees, who were added to the Boards of Trustees for the Social Security and Medicare trust funds in 1983. Their participation in the process has helped ensure transparency and objectivity in the development of the annual trustees’ reports.
Unfortunately, the public trustee positions have remained vacant since August 2015, during the development of the last three sets of reports, depriving the trustees’ process of independent, bipartisan oversight. In the absence of public trustees, as the most recent to serve in this capacity, we are partnering for the second consecutive year with the Bipartisan Policy Center to provide bipartisan review and analysis, highlighting key findings of the reports for policymakers and the public.
Last year, we wrote a primer on the contents of the trustees’ reports, which can continue to serve as a general guide for the reports’ readers. This brief previews the upcoming release of the 2018 annual trustees’ reports, summarizes findings of the most recent previous reports, and describes crucial areas in which this year’s trustees’ reports may be different. In particular, we raise key questions that will provide readers with important context for approaching this year’s reports. Several of the questions that should be asked are:
Do any of the reports’ core findings differ markedly from those of previous years?
This year’s reports will almost certainly reiterate longstanding findings that the financial challenges facing Social Security and Medicare are large and growing. If they remain consistent with previous reports, they will also describe the adverse consequences of delaying action to fix the financial imbalances in these critical programs upon which millions of Americans rely. It is always worth reviewing the trustees’ annual messages and report summaries to learn whether the current trustees have presented other significant new interpretations of the reports’ findings.
How have policy changes affected the trustees’ projections?
The policy and economic landscapes have shifted significantly since the 2017 trustees’ reports were crafted. The economy is running at or close to its potential and significant tax and budget legislation has recently been enacted. Projected income tax collections over the coming years have been reduced, and certain aspects of the Affordable Care Act (ACA)—such as the so-called “Cadillac tax,” health insurance mandate penalties, and Independent Payment Advisory Board (IPAB)—have been postponed or repealed altogether. These and other policy changes could affect the assumptions underlying the financial projections for Social Security and Medicare.
Have the trustees updated their projection methodologies and key assumptions?
In the past few annual reports, the trustees have not significantly modified the key assumptions that underlie their analyses—but with each passing year it becomes more likely that key assumptions will change. Updated demographic data must be incorporated into the projections. (For example, the Centers for Disease Control and Prevention recently reported that the 2017 U.S. birth rate was the lowest on record since 1987.) A number of these assumptions—from economic growth to immigration to health care cost growth – may have become outdated. Updated assumptions could change the financial projections for both programs, for better or for worse.
When will new public trustees be confirmed?
For the third consecutive year, no public trustees have been in place during the development of the trustees’ reports. This is as long as any vacancy in the public trustees’ positions since their inception. Lack of public oversight is always troubling, but becomes more so when, because of economic, demographic, or policy changes, the trustees must consider whether to change assumptions critical to the projections. Nominating and confirming public trustees would signal to the public that analysis of these programs’ finances continues to be developed in an objective and nonpartisan manner.