The annual Social Security and Medicare trustees report released on Friday has revealed that within the next decade, Medicare could run short of money to pay full benefits. The government-sponsored health insurance covers 65 million older and disabled people. The report forecasted that starting in 2031, Medicare would be unable to cover full benefits for inpatient hospital visits, nursing home stays, and home health care. Furthermore, just two years later, Social Security won't have enough cash on hand to pay out full benefits to its 66 million retirees.
This news is a significant political talking point as President Joe Biden heads into his expected reelection campaign in 2024. Republican leaders have yet to coalesce behind a plan to keep the programs solvent while AARP CEO Jo Ann Jenkins has called on elected officials to hammer out a plan.
According to the program’s trustees' report: "Social Security will not be able to pay all beneficiaries the amount they are entitled due starting from 2034 due to an economic slowdown, persistent inflation and weaker productivity growth." The report suggests that beneficiaries would receive about 80% of their scheduled benefits after that point.
A new report from the U.S Treasury Department predicts that Medicare and Social Security will reach insolvency in 2033 with Medicare funds exhausted by 2031. Starting in 2032, Social Security’s old age and survivors insurance trust fund will be able only pay for about three-quarters or roughly around 77 percent of its scheduled benefits for hospital services.
The aging population of America along with rising health care costs have put an enormous financial strain on both programs. Lack of funding for these programs is putting them under immense pressure.
President Joe Biden wants Democrats last year's extension of the Medicare program but Republicans argue this would make it harder for wealthy people who earn more than $400000 annually to avoid paying taxes on people who earn less in comparison.
The issue has divided Republicans eyeing their party's 2024 presidential nomination, with eight out of ten adults having favorable views of both programs. Democrats are more likely to determine the futures of these programs than Republicans.