Latest news with #2033
Yahoo
13 hours ago
- Business
- Yahoo
Contributor: Social Security is headed for a cliff. When will voters care?
Considering recent news, you may have missed that the 2025 trustees reports for Social Security and Medicare are out. Once again, they confirm what we've known for decades: Both programs are barreling straight toward insolvency. The Social Security retirement trust fund and Medicare Hospital Insurance trust fund are each on pace to run dry by 2033. When that happens, seniors will face an automatic 23% cut in their Social Security benefits. Medicare will reduce payments to hospitals by 11%. These cuts are not theoretical. They're baked into the law. If nothing changes, they will be made. I have nothing against cuts of this size. In fact, if it were up to me, I would cut deeper. Medicare is a terrible source of distortions for our convoluted healthcare market and needs to be reined in. Social Security was created back when being too old to work meant being poor. That's no longer the case for as many people. Thanks to decades of compound investment growth, widespread homeownership and rising asset values, seniors are no longer the systematically vulnerable group they once were. The top income quintile includes a growing number of retirees who draw substantial incomes from pensions and investment portfolios with Social Security benefits layered on top. These programs have become a transfer of wealth from the relatively poor to the relatively wealthy and old. Of course, America still has some poor seniors, so cutting across the board is bad. This is why the cuts should be targeted, not the automatic effects in 2033. And Congress should get started now. The size of the problem is staggering. Social Security's shortfall now equals 3.82% of taxable payroll or roughly 22% of scheduled benefit obligations. Avoiding insolvency eight years from now would require an immediate 27% benefit cut, according to former Social Security and Medicare trustee Charles Blahous. Alternatively, legislators could raise the payroll tax from 12.4% to 16.05%. That's a 29.4% increase. Or they could restructure Social Security so that only people who need the money would receive payments. But because facing this problem in an honest way is politically toxic, legislators are ignoring it. Blame does not rest solely with Congress. The American public has made it abundantly clear that they don't want reforms. They don't want benefit cuts or tax increases, and they certainly don't want higher retirement ages. So politicians pretend everything is fine. Congress does deserve fresh criticism for making things worse. Last year, legislators passed the misnamed 'Social Security Fairness Act,' giving windfall benefits to government workers who didn't pay into the system — which enlarges the shortfall. This year, the House proposed expanded tax breaks for seniors in the 'One Big Beautiful Bill Act,' which would further worsen the problem. The cost of political giveaways is steep. Social Security's 75-year unfunded obligation has now reached $28 trillion, up from $25 trillion just a year ago. Medicare is no better. Its costs are projected to rise from 3.8% of gross domestic product today to 6.7% by the end of the century (8.8% under more realistic assumptions). Most of the additional spending will be financed through general revenue, meaning more borrowing and more pressure on the federal budget. As Romina Boccia of the Cato Institute has documented, other countries have taken meaningful steps to address similar challenges. Sweden and Germany implemented automatic stabilizers that slow benefit growth or raise taxes when their systems become unsustainable. New Zealand and Canada have moved toward more modest, poverty-focused pension systems that offer basic support without bankrupting the state. A few weeks ago, Denmark increased the retirement age to 70. These are serious reforms. The U.S. has done nothing. Options exist. Policymakers could gradually raise the retirement age to reflect modern, healthier, longer lives. They could cap benefits at $2,050 monthly, preserving income for the bottom 50% of beneficiaries while progressively reducing benefits for the top half. They could reform the tax treatment of retirement income to encourage private savings, as Canada has done with its tax-free savings accounts. Any combination of these reforms would help. But that would require admitting that the current path is unsustainable. It would require telling voters the truth. It would require courage. So far, these admirable traits have been sorely lacking in our politicians. The programs' trustees have made the stakes clear: The only alternatives to reform will be drastic benefit cuts or massive tax hikes. Waiting until the trust funds are empty will leave no room for gradual, targeted solutions. It will force crisis-mode slashing that will hurt the most vulnerable. The ultimate blame is with voters who continue to reward politicians for promising the impossible. A functioning democracy cannot survive if the electorate insists on voting benefits for themselves to the point of insolvency. At some point, reality asserts itself. That moment is rapidly approaching. Veronique de Rugy is a senior research fellow at the Mercatus Center at George Mason University. This article was produced in collaboration with Creators Syndicate. If it's in the news right now, the L.A. Times' Opinion section covers it. Sign up for our weekly opinion newsletter. This story originally appeared in Los Angeles Times.
Washington Post
2 days ago
- Business
- Washington Post
Here's how to bolster Social Security
The June 19 news article 'Social Security could be insolvent by 2033' added to the fearmongering that's unfortunately ever-present in the Social Security conversation. Today, Social Security's trust funds have a combined reserve of $2.7 trillion, and spending has exceeded revenue since 2021. Yes, if nothing changes, in 2033, Social Security benefits will automatically be slashed by 23 percent. Though that is a meaningful reduction, it represents neither bankruptcy nor insolvency.
Yahoo
7 days ago
- Business
- Yahoo
Medicare go-broke date pushed up three years in latest trustees report
This story was originally published on Healthcare Dive. To receive daily news and insights, subscribe to our free daily Healthcare Dive newsletter. A key trust fund underpinning Medicare's hospital benefit will go broke three years earlier than previously expected absent congressional action, threatening benefits for seniors, according to the Medicare trustees' annual report released Wednesday. The Medicare Hospital Insurance trust fund will be depleted in 2033, instead of 2036, as Medicare spending continues to outpace the program's income, the trustees — a group comprised of the HHS, Treasury and Labor secretaries, along with the Social Security commissioner — warned. The bleaker outlook is due to higher-than-expected spending for hospital care, hospice services and physician-administered drugs. The trustees called on Congress to act quickly to stabilize Medicare, though near-term action is unlikely as the Republican majority focuses on advancing their reconciliation megabill. Medicare has been teetering on the edge of insolvency for a while. But the latest report from Medicare's trustees is more dire than last year's, which projected Medicare would become insolvent in more than a decade. Now, Medicare's hospital trust fund will start running out of money in eight years — when today's 57-year-olds first become eligible for the program. The looming go-broke date is a result of the fund's substantial shortfall as Medicare costs continue to grow rapidly, trustees said in the report. Medicare costs are expected to increase from 3.8% of the gross domestic product in 2024 to 6.2% in 2050 before reaching 6.7% in 2099, the report projects. Costs to another fund that pays Parts B and D, called the Supplemental Medical Insurance trust fund, are also climbing, increasing pressure on beneficiary budgets and the federal budget. (Though, the Supplemental Medical Insurance trust fund is largely funded by premiums and general revenue that resets each year and doesn't face the same solvency concerns.) This year's estimates, which are based on current payment rates, could be conservative, trustees said. Under an alternate scenario, in which provider payments grow at a rate more consistent with underlying medical costs — a change aggressively lobbied for by physician associations — Medicare spending will rise to 8.8% of the GDP in 2099 rather than 6.7%, according to the report. The precarious footing of the federal insurance program, which covers almost 69 million people in the U.S., is due to the country's underlying demographic shifts, according to experts. More and more Americans are aging into Medicare, while at the same time the number of workers paying into its trust fund is dropping. More seniors are also selecting privatized Medicare Advantage plans, which are more expensive than traditional Medicare coverage. If and when the U.S. hits Medicare's go-broke date, the hospital trust fund, which pays hospitals and providers of post-acute services and also covers some of the cost of private Medicare Advantage plans, will have inadequate income to fund those benefits. Medicare payments would immediately be cut by 11%, according to the report. Those cuts would grow over time, likely disrupting services for seniors and reimbursement for providers. It's worth nothing that there's a significant degree of uncertainty in trustees' projections, which vary based on macroeconomic forces in a given year. For example, in 2020, in the early throes of COVID-19, the board predicted the hospital trust fund would run out by 2026. That deadline was pushed back to 2028 and then 2031 in subsequent years' reports, amid a broader economic rebound and more care shifting to cheaper outpatient settings. Still, the fund hasn't met the trustees' test for short-range financial adequacy since 2003, and has triggered funding warnings since 2018. To date, Congress has not allowed Medicare to go under. But legislators' lack of action despite years of warnings is a source of heartburn for budget hawks, Medicare advocates and physician lobbies. Experts say lawmakers need to act soon given many reforms to stabilize Medicare could take a few years to go into effect. 'The projections in this report show that change is needed to address Medicare's financial challenges,' the Medicare trustees wrote in their report. 'The sooner solutions are enacted, the more flexible and gradual they can be.' According to the Committee for a Responsible Federal Budget, restoring Medicare solvency would require Congress to boost the payroll tax rate by 14% or reduce Medicare spending by 9% — both politically unappetizing proposals. Other reforms that could curb Medicare spending, like implementing site-neutral payments or reducing overpayments in MA, have more bipartisan support but aren't a policy priority on the Hill. Republicans are currently focused on hammering out legislation to extend tax cuts from President Donald Trump's first term, cut green energy programs, fund border control and curb Medicaid spending. 'We are running out of time to phase in changes gradually and avoid harsh cuts, sharp tax increases, or unacceptable borrowing. Demagoguing this issue may be politically expedient, but it will ultimately prove ruinous for the tens of millions of Americans that rely on the programs,' Maya MacGuineas, the president of the CRFB, said in a statement Wednesday. Recommended Reading Medicare go-broke date extended to 2036, but warning bells continue ringing
Daily Mail
20-06-2025
- Business
- Daily Mail
Panic mounts as social security's cash shortfall date revealed
The US Social Security and Medicare programs for seniors will both run short of funds to pay full benefits in 2033. The go-broke dates the two trust funds have moved up due to rising health care costs and new legislation affecting Social Security benefits, according to an annual report released Wednesday. The yearly assessment found that Medicare's hospital insurance trust fund will be unable to fully cover costs beginning in 2033 — three years earlier than last year's estimate. Higher-than-forecast hospitalizations of Americans over 65 years old was a key factor. Social Security's combined trust funds, which support retirement and disability benefits to 70 million Americans, are also expected to be depleted in 2033. While the year was unchanged from last year's report, it was advanced by three calendar quarters within that year. The projections reflect higher-than-expected healthcare spending, along with recent legislation that increased Social Security benefits for some workers. Once the funds are exhausted, beneficiaries would still receive payments, but at reduced levels. Medicare would be able to cover just 89 percent of hospital costs, while Social Security could pay only about 81 percent of promised benefits. The trustees say the latest findings show the urgency of needed changes to the programs, which have faced dire financial projections for decades. But making changes to the programs has long been politically unpopular, and lawmakers have repeatedly kicked Social Security and Medicare´s troubling math to the next generation. President Donald Trump and other Republicans have vowed not to make any cuts to Medicare or Social Security, even as they seek to shrink the federal government´s expenditures. 'The financial status of the trust funds remains a top priority for the administration,' said Social Security Administration commissioner Frank Bisignano (pictured) in a statement. The new forecast adds urgency to a long-standing challenge facing Congress, which has repeatedly delayed making reforms due to political sensitivity around the issue. Lawmakers would need to act — either by raising taxes, reducing benefits, or both —to ensure long-term solvency. President Donald Trump and many Republican lawmakers have pledged not to cut Medicare or Social Security benefits, but critics say recent legislative changes have worsened the programs' financial outlook. One provision enacted in January—the Social Security Fairness Act—eliminated two rules that had reduced benefits for certain workers, effectively increasing payments and accelerating the trust fund's projected depletion. Romina Boccia (pictured), director of budget and entitlement policy at the CATO Institute, called the change 'a political giveaway masquerading as reform.' Instead of tackling Social Security´s structural imbalances, Congress chose to increase benefits for a vocal minority-accelerating trust fund insolvency.' About 68 million Americans are currently enrolled in Medicare, and more than 70 million receive Social Security benefits. Both programs are primarily funded through payroll taxes, but costs are projected to outpace revenues due to the country's aging population and rising healthcare expenses. Experts say failure to act soon could result in sudden benefit cuts and instability for millions of retirees and disabled Americans. 'Congress must act to protect and strengthen the Social Security that Americans have earned and paid into,' said AARP CEO Myechia Minter-Jordan (pictured). Several policy proposals have been floated in recent years, but none have gained significant momentum. The last major reform to Social Security came in 1983, when the eligibility age for full retirement benefits was raised from 65 to 67. Without further legislative changes, the federal programs that serve as the backbone of retirement security in the US could face significant challenges within the next decade. Last year, billionaire CEO Larry Fink (pictured) said Americans should work beyond the age of 65 to stop the Social Security system collapsing. Meanwhile, experts recently said Americans are making a big mistake by claiming their Social Security checks early, since delaying their claims could lead to higher payments. Every year you delay taking a Social Security payment after full retirement age you receive a significant increase in payments up to the age of 70.
Daily Mail
20-06-2025
- Business
- Daily Mail
Panic as Social Security bosses set date America will run out of cash
The US Social Security and Medicare programs for seniors will both run short of funds to pay full benefits in 2033. The go-broke dates the two trust funds have moved up due to rising health care costs and new legislation affecting Social Security benefits, according to an annual report released Wednesday. The yearly assessment found that Medicare's hospital insurance trust fund will be unable to fully cover costs beginning in 2033 — three years earlier than last year's estimate. Higher-than-forecast hospitalizations of Americans over 65 years old was a key factor. Social Security's combined trust funds, which support retirement and disability benefits to 70 million Americans, are also expected to be depleted in 2033. While the year was unchanged from last year's report, it was advanced by three calendar quarters within that year. The projections reflect higher-than-expected healthcare spending, along with recent legislation that increased Social Security benefits for some workers. Once the funds are exhausted, beneficiaries would still receive payments, but at reduced levels. Medicare would be able to cover just 89 percent of hospital costs, while Social Security could pay only about 81 percent of promised benefits. The trustees say the latest findings show the urgency of needed changes to the programs, which have faced dire financial projections for decades. But making changes to the programs has long been politically unpopular, and lawmakers have repeatedly kicked Social Security and Medicare´s troubling math to the next generation. President Donald Trump and other Republicans have vowed not to make any cuts to Medicare or Social Security, even as they seek to shrink the federal government´s expenditures. 'The financial status of the trust funds remains a top priority for the administration,' said Social Security Administration commissioner Frank Bisignano in a statement. The new forecast adds urgency to a long-standing challenge facing Congress, which has repeatedly delayed making reforms due to political sensitivity around the issue. Lawmakers would need to act — either by raising taxes, reducing benefits, or both —to ensure long-term solvency. President Donald Trump and many Republican lawmakers have pledged not to cut Medicare or Social Security benefits, but critics say recent legislative changes have worsened the programs' financial outlook. One provision enacted in January—the Social Security Fairness Act—eliminated two rules that had reduced benefits for certain workers, effectively increasing payments and accelerating the trust fund's projected depletion. Romina Boccia, director of budget and entitlement policy at the CATO Institute, called the change 'a political giveaway masquerading as reform.' Instead of tackling Social Security´s structural imbalances, Congress chose to increase benefits for a vocal minority-accelerating trust fund insolvency.' About 68 million Americans are currently enrolled in Medicare, and more than 70 million receive Social Security benefits. Both programs are primarily funded through payroll taxes, but costs are projected to outpace revenues due to the country's aging population and rising healthcare expenses. Experts say failure to act soon could result in sudden benefit cuts and instability for millions of retirees and disabled Americans. 'Congress must act to protect and strengthen the Social Security that Americans have earned and paid into,' said AARP CEO Myechia Minter-Jordan. Several policy proposals have been floated in recent years, but none have gained significant momentum. The last major reform to Social Security came in 1983, when the eligibility age for full retirement benefits was raised from 65 to 67. Without further legislative changes, the federal programs that serve as the backbone of retirement security in the US could face significant challenges within the next decade. Last year, billionaire CEO Larry Fink said Americans should work beyond the age of 65 to stop the Social Security system collapsing. Meanwhile, experts recently said Americans are making a big mistake by claiming their Social Security checks early, since delaying their claims could lead to higher payments. Every year you delay taking a Social Security payment after full retirement age you receive a significant increase in payments up to the age of 70.
