As prepared for delivery
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WASHINGTON - I’d
like to start by welcoming my fellow Trustees to Treasury and to take this
opportunity to thank the chief actuaries, Stephen
Goss and Richard Foster, and their staffs for all their hard work.
Every year, the Social Security and
Medicare Boards of Trustees issue reports to Congress on the strength of these
two indispensable programs, and earlier today, the trustees held a meeting to
complete this year’s financial review and to transmit the final reports.
Millions of Americans rely on Social Security and Medicare
for income and health care, and millions more will do so in the future. As today’s reports make clear, these programs
have the resources they need to fulfill their commitments to these Americans
for years to come. But what these
reports also reinforce is that we must take steps to keep these programs whole
for the future.
Pressures on these programs are mounting—Americans
are living longer and the number of retirees is growing. The reports project that, when considered on
a combined basis, Social Security’s retirement and disability programs have
dedicated funds sufficient to cover benefits for the next 20 years, but in
2033, incoming revenues and trust fund resources will be insufficient to
maintain payment of full benefits. After
that time, dedicated funds will be sufficient to cover about three-quarters of
Medicare’s Hospital Insurance Trust
Fund will have resources sufficient to cover benefits until 2024, the same year
that was projected in last year’s report.
The projections in this year’s
report are somewhat more pessimistic than last year’s projections. For the combined Social Security and
Disability Trust Funds, the 75-year actuarial imbalance is up 0.4 of a
percentage point. This is in large part
due to the Trustees’ assumption of lower real wages over the 75-year projection
period. With regard to Medicare, the
projected actuarial imbalance of the Trust Fund has increased by 0.6 percentage
point due to changes in the cost projection methods recommended by the
2010-2011 Medicare technical review panel.
uncertainty surrounding these 75-year projections is substantial, nonetheless,
these reports emphasize the importance of building consensus on reforms that
will put these programs on a sounder financial footing.
Care Act began this process with the most significant entitlement reform in
decades. That law included measures to
strengthen Medicare by reining in health care costs. And one of the most important things we can
do right now to preserve Medicare is to implement the Affordable Care Act fully
Still, more needs
to be done. That’s why the President has
put forward a detailed plan to further reform and strengthen Medicare. By the beginning of the next decade, his plan
achieves the same amount of annual health savings as the bipartisan plan
proposed by Simpson-Bowles. His approach
lowers costs by changing the way we pay for health care with new incentives for
doctors and hospitals, eliminating excessive subsidies to prescription drug
companies, and asking the very wealthiest seniors to pay a little more.
The President is also committed to
keeping Social Security strong for future generations, particularly as more
private employers move away from defined benefit plans. In his State of the Union address last year,
the President outlined a set of principles for reform. These principles emphasize finding a
bipartisan solution that strengthens Social Security and does not hurt current
recipients, slash benefits for future generations, or tie the program to the
As we work to strengthen Social Security and Medicare, it is
critical that reforms are slowly phased-in over time so current beneficiaries
are not affected and future beneficiaries do not experience precipitous
At the same time, adjustments to
Social Security and Medicare must be balanced and evenhanded. We will not support proposals that sow the
seeds of their destruction in the name of reform, or that shift the cost of health care to seniors in order
to sustain tax cuts for the most fortunate Americans.
Social Security and Medicare are the twin pillars of
retirement security in this country.
They are, as the President has said, “expressions of the fact that we
are one nation.” These programs, which
are rooted in a basic American sense of fairness and responsibility, have been
supported across generations by both political parties, in both Democratic and