WASHINGTON – Today the Social Security and Medicare Boards of Trustees issued their annual financial review of the programs.
Taken in combination, Social Security’s retirement and disability programs have dedicated resources sufficient to cover benefits for nearly two decades, until 2034. The Medicare Hospital Insurance Trust Fund will have sufficient funds to cover its obligations until 2028, two years earlier than was projected last year, but still 11 years later than was projected in the last report issued prior to passage of the Affordable Care Act.
Taken in combination, Social Security’s retirement and disability trust fund reserves are projected to be exhausted in 2034, the same year that was projected in last year’s Trustees Report. After trust fund depletion, annual revenues from the dedicated payroll tax and taxation of Social Security benefits will be sufficient to fund about three-quarters of scheduled benefits through 2090. The 75-year actuarial deficit for the combined trust funds is estimated at 2.66 percent of taxable payroll, down from 2.68 percent of taxable payroll estimated in last year’s Report. This improvement reflects a 0.06 percentage point worsening due to extending the projection period and valuation date one year, and a 0.08 percentage point improvement due to new data and improved projection methods.
The Medicare Hospital Insurance (HI) Trust Fund will have sufficient funds to cover its obligations until 2028, two years earlier than projected last year, but still 11 years later than was projected in the last report issued prior to passage of the Affordable Care Act. The projected portion of scheduled benefits that can be financed with dedicated revenues is 87 percent in 2028, declines slowly to 79 percent in 2043, and then gradually increases to 86 percent in 2090. The 75-year actuarial deficit in the HI Trust Fund is projected at 0.73 percent of taxable payroll, up from 0.68 percent projected in last year’s report. This improvement reflects a 0.01 percentage point worsening due to extending the projection period and valuation date one year, and a 0.04 percentage point worsening primarily due to higher projected utilization rates, especially in the near term.
The HI trust fund depletion date of 2028 is two years earlier than projected last year despite the modest changes in projected long-term finances because the revisions to projected income and cost are concentrated in early years of the projection, and also because last year’s report projected only modest positive trust fund balances in 2028 and 2029.
Part B of Supplementary Medical Insurance (SMI), which pays doctors’ bills and other outpatient expenses, and Part D, which provides access to prescription drug coverage, are both projected to remain adequately financed into the indefinite future because current law automatically provides financing each year to meet the next year’s expected costs. However, the aging population and rising health care costs cause SMI projected costs to grow steadily from 2.1 percent of GDP in 2015 to 3.5 percent of GDP in 2037, and then more slowly to 3.8 percent of GDP by 2090. Roughly three-quarters of these costs will be financed from general revenues and about one-quarter from premiums paid by beneficiaries.