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 the next 19 years, until 2033. However, the projected depletion date for the separate Social Security's Disability Insurance (DI) Trust Fund is only two years away, in late 2016.
The Medicare Hospital Insurance Trust Fund will have sufficient funds to cover its obligations until 2030, four years later than was projected last year, and 13 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 2033, the same year projected in last year's Trustees Report. After trust fund exhaustion, annual revenues from the dedicated payroll tax will be sufficient to fund three-quarters of scheduled benefits through 2088.
Social Security's Disability Insurance (DI) program faces the most immediate financing shortfall of any of the separate trust funds. The DI Trust Fund reserves are projected to be depleted in late 2016, also unchanged from last year's estimate, after which time dedicated revenues are projected to cover about 80 percent of scheduled benefit payments. Legislation will be needed to address this financial imbalance.
The Medicare Hospital Insurance (HI) Trust Fund will have sufficient funds to cover its obligations until 2030, four years later than was projected last year, and 13 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 85 percent in 2030 and declines slowly to about 75 percent in 2050 and later. The 75-year actuarial deficit in the HI Trust Fund is projected at 0.87 percent of taxable payroll, down from 1.11 percent projected in last year's report. This improved outlook for HI is primarily due to lower than expected spending in 2013 for most HI service categories, which reduced the base period expenditure level and contributed to the Trustees' decision to lower projected near-term spending growth.
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 1.9 percent of GDP in 2013 to approximately 3.3 percent of GDP in 2035 and 4.5 percent of GDP by 2088. Roughly three-quarters of these costs will be financed from general revenues and about one-quarter from premiums paid by beneficiaries.