Stewardship of Our National Treasures: CBPPs Analyses of the Medicare and Social Security Trustees’ Report

May 31st, 2013 at 5:00 pm

I told you I’d link to these–my CBPP colleagues’ analyses of the Trustees reports on Soc Sec and Mcare–and here they are.

Paul’s Medicare analysis echoes some of my earlier points regarding the positive impact of health reform on the Medicare’s finances, and he also pre-empts some potential silliness re claims of “bankruptcy!”

The projected  insolvency of the HI trust fund doesn’t mean that Medicare is “running out of  money” or “going bankrupt,” as is sometimes suggested.  Even in 2026, when the trust fund is projected for  exhaustion, incoming payroll taxes and other revenues will be sufficient to  continue paying 87 percent of program costs.  Moreover, trustees’ reports have been  projecting impending insolvency for four decades, but Medicare has always paid  the benefits owed because Presidents and Congresses have taken steps to keep  spending and resources in balance in the near term.

My emphasis, but why do I emphasize that point?  Because it is a reminder that these programs are not some natural physical entity like the climate or the oceans.  They are institutions that we have created–that every advanced economy has created–in order to provide retirement security to those who have come before us.  We can nurture them and ensure their solvency, or we can break them.  Neither outcome is inevitable–we must choose.

In determining that choice, I suggest we listen carefully to Bob Greenstein’s  reminder about the importance of Social Security benefits to retirees’ incomes:

Nearly every American participates in Social  Security, first as a worker and eventually as a beneficiary.  The program’s benefits are the foundation of  income security in old age, though they are modest both in dollar terms  (elderly retirees and widows receive an average Social Security benefit of  $15,000 a year) and compared with benefits in other countries (Social Security  benefits replace a smaller share of pre-retirement earnings than comparable  programs in most other developed nations).   In fact, the median income of elderly married couples from all sources other than Social Security equaled just  $23,000 in 2010; for non-married elderly people (including widows and  widowers), median income from other sources equaled only $3,000.  And millions of beneficiaries have no income other than Social Security.

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Absent these benefits, about 44% of seniors would be poor; with them, their poverty rate is 9%.

I get that these trustees reports are a touch on the dry side–that’s why the good folks at CBPP summarize the good parts for you.  But if you believe, as I do, that these programs are national treasures, then responsible stewardship means paying attention to their financial health and taking the necessary steps to shore them up.  As Bob and Paul’s analyses reveal, those steps are by no means huge, and they can and must be implemented in ways that protect vulnerable beneficiaries.  The sooner we take them, the better.

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2 comments in reply to "Stewardship of Our National Treasures: CBPPs Analyses of the Medicare and Social Security Trustees’ Report"

  1. Al from NC says:

    Why isn’t the first item for discussion in the solvency of Social Security the cap of $113,700 on assessable wages? If the cap were simply raised or removed altogether, the system could be viable for the foreseeable future.


    • Fred Donaldson says:

      Agreed! And negotiating Medicare drug prices – such as $10,000 for one injection, seems fairer than more co-pays, hiking deductibles from less than $150 to about $600, plus limiting decent supplemental policies.

      Retirement – not 65 as promised in 1960, but 67 and maybe heading far north of that. The only deals kept by the government seem to be deals with contractors and the finance industry.

      The elite beltway theory seems to be: no changes that increase taxes on folks who make more than $116,000 or manage hedge funds, just hit the jerks who paid FICA on every dollar earned their entire life, and now find the contract changed by Dems’ compromise to appease (also) millionaire Repubs. None of these politicians will ever use Medicare, and Soc Sec is peanuts to them, so they don’t really care what it costs the little people or how cuts can destroy lives.


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