The top actuaries for Social Security and Medicare testified before a House panel Thursday about the financial woes of two safety net programs that could see key trust funds run out in about a decade, leaving beneficiaries to face with a benefit reduction if the funding gap is not resolved by Congress.
The Trustees for Social Security and Medicare recently released a report examining the health of major trust funds, which found that the funds are on pace to become depleted in roughly a decade. When that happens, those programs will only be able to pay what they receive through incoming payroll tax bills, meaning benefits will automatically be cut under current law.
Social Security’s Old-Age and Survivors Insurance (OASI) trust fund is expected to be depleted in 2033, when only 79% of scheduled benefits will be paid. When combined with the Disability Insurance (DI) fund, the date moves to 2035 with 83% of benefits payable. Based on the average monthly benefit of $1,907 as of January 2024, this 17% cut would leave beneficiaries with a check of $1,582 — $325 less per month and $3,900 less annually.
The Medicare Health Insurance (HI) trust fund, which covers hospital and post-hospital care, is projected to be depleted in 2036 when 89% of benefits will be paid. Although the Medicare HI depletion date was five years later than a year ago, the Social Security OASI date was unchanged.
Stephen Goss, chief actuary for the Social Security Administration, noted that members of Congress from both sides of the aisle have proposed a wide range of policies aimed at reforming the two programs to shore up their finances — giving policymakers a menu of options. to be considered. ahead.
“Because of the many, many members of Congress putting forward proposals to affect Social Security, we have a large list of provisions and proposals on our website to look at and choose from,” Goss said. “A commission that would look at all these possibilities and come to a consensus would be a really good thing.”
Paul Spitalnic, chief actuary for the Centers for Medicare and Medicaid Services, added that the sooner Congress makes reforms to both programs, the less dramatic those changes will have to be to put the programs on a sound footing. financial.
“So the sooner the better of course,” Spitalnic said.
House Budget Committee Chairman Jodey Arrington (R-Texas) said in his opening remarks that “over 60 million people” are counting on Social Security and Medicare today, with 10,000 more a day becoming eligible for programs.
“My prayer is that we are united — not as Republicans, not as Democrats, but as Americans,” Arrington said. “I’m not going to get everything I want to settle it maybe, they’re probably not going to get everything they want, but we’ve got to do it or there’s going to be an automatic cut.”
He noted that the committee approved a bill that would create a bipartisan fiscal commission with lawmakers from both parties, who would seek to reach a consensus on policies to stabilize the nation’s finances, including near-term issues. with Social Security and Medicare. The bill has not yet been reviewed by the House of Representatives.
In his opening remarks, ranking member Brendan Boyle (D-Pa.) noted that there are strong partisan differences between Democrats and Republicans when it comes to addressing reforms to safety net programs, but he believes that Congress in the fund must act to ensure the continuation of full benefits in the future.
“I believe deeply in Social Security and Medicare and what they represent even beyond the payments, what they say to the American people is that we have a basic commitment to everyone in our society that we will take care of you. when you have to,” Boyle said.
“We have until 2035 for the Social Security and Disability Insurance Trust Funds, as well as 2036 for Medicare, but ultimately Congress must ensure that these programs have the resources to continue paying benefits to complete,” he added.
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