COLUMBIA, Mo. — According to a new government analysis, Social Security will have to cut benefits by 21% in 2034 if lawmakers don’t act on the program’s long-term funding problem. Medicare, on the other hand, could run dry sooner. The report notes that Medicare funding is being depleted faster than expected in part because of Republicans’ “repeal of the individual mandate, which increased the estimate of the number of uninsured.”
In 16 years, Social Security will have to cut benefits by 21% if lawmakers do nothing to cure the program’s long-term funding shortfall.
That’s what the Social Security and Medicare trustees projected in their 2018 annual report released Tuesday.
The trustees estimate that by 2034 the combined trust funds for Social Security — which help fund the old age and disability programs — will run dry. At that point Social Security will be able to pay only 79% in promised benefits to retirees and disabled beneficiaries.
…The forecast for Medicare, meanwhile, is a bit worse than last year’s.
The trust fund for Medicare Part A, which covers hospital and nursing home costs for seniors, would run dry by 2026, three years earlier than last year’s projection. At that point the program would only be able to pay out 91% of promised benefits.
Before the Affordable Care Act was passed, the trustees had projected the Part A trust fund would run dry this year.
…Congress has punted on the issue of shoring up the solvency for both entitlement programs for years. And this year likely won’t be any different, with lawmakers focused on navigating the Trump era and planning for the mid-terms in November.
To ensure both Social Security and Medicare remain solvent for decades to come, they have three basic choices: they can raise the payroll taxes paid into the programs by both employees and employers, they can cut benefits for some or all beneficiaries, or they can do some combination of the two.
…Instead any changes made will have to balance who can best afford to pay more or receive less, and how much time they’re given to adjust to those changes.
In all cases, however, the longer lawmakers wait, the more dramatic and abrupt the changes will have to be.