Social Security and Medicare are both “safe” for decades to come, according to two recent studies. In fact, Social Security will never run out of money, according to the Economic Policy Institute.
The Medicare Part A trust fund, according to the Medicare Rights Center, will be here for at least 75 years. Both the Institute and the Center studies refute doomsday myths.
According to Ross Eisenbrev, vice president of the Economic Policy Institute, “Even in 2033, when the multi-trillion dollar buildup of funds for the baby boomers is used up, there will be hundreds of billions of dollars of contributions going into the trust fund, and Social Security will continue to be able to pay three-fourths of promised benefits.”
Eisenbrev says “Many claim younger workers will never be able to claim Social Security benefits. Far from it, even workers who retire after 2033, benefits will be higher in inflation-adjusted terms than they are today.
“Reducing promised benefits is a bad thing and we should avoid it by making better-off Americans pay the same Social Security tax rate as average Americans.” Eisenbrev is referring to those who have large unearned incomes such as Warren Buffet and Mitt Romney.
He says that cutting benefits or raising the retirement age or reducing cost-of-living increases is no solution for the future benefits dilemma. The only solution is “by raising more revenue.”
In reference to Medicare, Joe Baker, president of the Medicare Rights Center, says, “It is important that Americans understand that Medicare will not suddenly go bankrupt and run out of money on a certain doomsday. The real threat to Medicare are proposals that convert Medicare into a premium support or voucher program or those proposals that undermine the availability of guaranteed benefits and affordable coverage to those with Medicare.”
According to the Center, the Medicare Hospital Insurance trust (the Part A trust that pays hospital bills) will remain solvent as is through 2024.
Baker says, “After 2024, the trust fund will still be able to provide coverage, though at a lesser rate.” According to the Center on Budget and Policy Priorities, starting in 2025 Medicare will be able to cover 87 percent of all inpatient costs, and over the next 75 years the trust fund, on average, will be able to cover 74 percent of Medicare’s inpatient costs.”
The Center points out that Medicare Part B, which covers outpatient services (doctor’s bills) and Part D (drugs) are financed through beneficiary premiums and general revenues and not through the trust fund.