WASHINGTON – Medicare’s finances are looking brighter, the government said Monday. The program’s giant hospital trust fund won’t be exhausted until 2030 – four years later than last year’s estimate.
Meanwhile, Social Security’s massive retirement program will remain solvent until 2034, officials say, although disability benefits are in more immediate danger.
The disability trust fund now is projected to run dry in 2016, unless Congress acts. At that point, the program will collect enough payroll taxes to pay only 81 percent of benefits.
The trustees who oversee Social Security and Medicare issued their annual report Monday on the financial health of the government’s two largest benefit programs.
The trustees project a 1.5 percent increase in monthly Social Security payments to beneficiaries for next year. That would be among the lowest since automatic adjustments were adopted in the 1970s. The increase is based on a government measure of inflation.
Medicare’s Part B monthly premium for outpatient care is expected to remain unchanged for next year, at $104.90. Average premiums for prescription coverage are expected to increase by less than $2 a month.
Social Security’s finances are relatively unchanged from a year ago. Medicare’s improved finances are largely due to a continuing slowdown in health care spending, the report said.
Experts debate whether the health-spending slowdown is the result of a sluggish economy or represents a dividend from President Barack Obama’s health care law, and more recent Medicare cuts by Congress. Private insurers, including those in Medicare’s managed care program, are also shifting more costs to patients, contributing to the slowdown.
No one knows and there is an active debate going on, said Charles Blahous III, one of two public trustees. That debate is certainly not one that the trustees are going to settle.
The trustees consist of the secretaries of the Treasury, Health and Human Services, and Labor Departments, as well as the Social Security commissioner and two public trustees – a Democrat and a Republican.
Medicare is adding 10,000 new beneficiaries a day as baby boomers reach age 65. But the report said that costs per beneficiary were essentially unchanged in 2013, for the second year in a row.
That particular statistic is critical because per-person costs had surged for many years.
In the long run, both Social Security and Medicare are still in financial danger, the trustees said. Benefit cuts, tax increases or a combination of both will be needed to keep paying benefits at current levels.
About 58 million people receive Social Security benefits, including 41 million retired workers and dependents, 11 million disabled workers and 6 million survivors of deceased workers.
Last year, Social Security paid $823 billion in benefits but collected only $747 billion in taxes. Social Security has been paying out more in benefits than it has collected in taxes since 2010, a trend that is expected to continue and accelerate.
The $2.8 trillion trust fund, which is made up of special Treasury bonds, has continued to grow because it is earning interest. However, the balance will start to go down in 2020, the report said.
More than 50 million retirees and disabled people get Medicare.
The hospital trust fund is only part of the program. Coverage for outpatient care and prescription drugs is covered by premiums and other government spending.