The chief actuaries for Social Security and Medicare testified before a House committee Thursday about looming financial difficulties for the two safety-net programs that could deplete key trust funds within about a decade and leave recipients facing benefit cuts if Congress doesn’t fix the funding shortfall.
Social Security and Medicare trustees recently released reports examining the health of their key trust funds and found that they are on track to run out of funds within about a decade, which would leave the programs only able to pay for themselves with payroll tax revenues and automatically cut benefits under current law.
Social Security’s Old Age and Survivors Insurance (OASI) Trust Fund is projected to be depleted in 2033, at which point it will only be paying 79% of scheduled benefits. When it is combined with the Disability Insurance (DI) Fund, that date will move to 2035, at which point it will be paying 83% of scheduled benefits. Based on an average monthly benefit of $1,907 as of January 2024, the 17% reduction would result in recipients receiving checks of $1,582, a decrease of $325 per month and $3,900 per year.
The Medicare Health Insurance (HI) Trust Fund, which covers hospitalization and post-hospitalization care, is projected to be depleted in 2036, when 89% of benefits are paid. The Medicare HI depletion date has been delayed by five years from a year ago, but the Social Security OASI date remains unchanged.
Stephen Goss, the Social Security Administration’s chief actuary, said members of Congress from both parties have proposed a variety of policies aimed at reforming the two programs to shore up their finances, giving policymakers a menu of options to consider going forward.
“Many members of Congress have put forward proposals that would affect Social Security, so we have a huge list of provisions and proposals on our website that we can review and choose from,” Goss said. “It would be really good to have a committee that would look at all these possibilities and come to an agreement.”
Paul Spitalnick, chief actuary at the Centers for Medicare and Medicaid Services, added that the sooner Congress reforms the programs, the less dramatic the changes needed to put them on sound financial footing will be.
“So the sooner the better, for sure,” Spitalnick said.
In her opening remarks, House Budget Committee Chairman Jody Arrington (R-Texas) said “more than 60 million people” currently rely on Social Security and Medicare, with another 10,000 becoming eligible for those programs every day.
“My prayer is that we come together, not as Republicans, not as Democrats, but as Americans,” Arrington said. “I’m not going to get all the solutions that I want, and they’re not going to get all the solutions that they want, but we have to come together or there will be automatic cuts to the budget.”
He noted that the committee passed a bill that has yet to be debated by the full House that would create a bipartisan fiscal committee of lawmakers from both parties to reach a consensus on policies to stabilize the nation’s finances, including the immediate problems with Social Security and Medicare.
In his opening remarks, Sen. Brendan Boyle (D-PA) noted clear partisan differences between Democrats and Republicans when it comes to reforming safety net programs, but he believes ultimately Congress must act to ensure full benefits continue into the future.
“I believe deeply in Social Security and Medicare, and what they convey to the American people beyond a paycheck is that there is a fundamental promise to every person in our society that they will be taken care of in their time of need,” Boyle said.
“While the combined Social Security and Disability Insurance Trust Funds have funding through 2035 and Medicare through 2036, Congress must ultimately ensure that these programs have the resources to continue paying full benefits,” he added.
