Social Security reserves, Medicare solvency stronger than expected due to Affordable Care Act savings.
Recipients of Social Security and Medicare don’t have to worry about the federal government reserves running low to fund programs anytime soon. The Social Security Board of Trustees announced that the Social Security reserves continue to grow for now and won’t be depleted until 2033, the same date projected a year ago.
Medicare Trustees announced that the trust fund that finances Medicare’s hospital insurance coverage has an extra four years of solvency until 2030. A year ago, trustees said the fund would run low in 2026.
The Medicare Part B premium for 2015 will not be determined until later this year, but the preliminary estimate in the report indicates that it will remain unchanged from the 2013 premium for the second consecutive year. Part B covers doctor’s visits, surgery and supplies to treat a condition.
Trustees credited the financial boon in part to cost controls implemented in the Affordable Care Act (Obamacare). It says spending is projected to continue to grow slower than the overall economy for the next several years, which is good news for beneficiaries and taxpayers, says Marilyn Tavenner, administrator of the Centers for Medicare & Medicaid.
Tavenner says it has made progress in improving patient safety, decreasing hospital readmissions and establishing new payment models such as accountable care organizations aimed at reducing costs and improving quality. During the past four years, Medicare spending growth has averaged 0.8 percent annually, much more slowly than the average 3.1 percent annual increase in per capita GDP and national health expenditures over the same period and is expected to grow slowly over the next several years, officials say.
“These reforms slow the rise in healthcare spending while improving the quality of care for beneficiaries,” Tavenner says.
In 2013, Medicare covered 52.3 million people: 43.5 million people aged 65 and older, and 8.8 million people with disabilities. About 28 percent of these beneficiaries have chosen to enroll in Part C private health plans that contract with Medicare to deliver Part A and Part B health services. Total expenditures in 2013 were $582.9 billion. Total income was $575.8 billion.
“The Medicare report reminds us once again that the Affordable Care Act is controlling healthcare costs,” says Richard Fiesta, executive director of the Alliance for Retired Americans. “It’s great news that the life of the Medicare Trust Fund has been extended by another four years to 2030. Attempts to repeal healthcare reform would only undo the progress we have made in controlling healthcare costs.”
As for Social Security, the report says that if Congress doesn’t act by 2033, the federal government will only be able to pay 77 percent of scheduled benefits. Congress will need to address Social Security’s disability insurance fund by 2016 when it will become depleted and 81 percent of benefits are payable after that point.
Social Security reserves are still growing and will continue to do so through 2019, the report says.
“The most important lesson from the report is that Social Security has a large and growing surplus,” says Fiesta whose group has supported legislation to increase Social Security benefits on average of $800 a year to support people in their retirement. “We do not need to cut Social Security to address the projected shortfall in the disability trust fund. Rather, we just need a technical adjustment. Congress should, as it has done multiple times before, simply reallocate income across these funds.”
The Social Security Administration estimates 163 million people paid payroll taxes for Social Security in 2013. By the end of 2013, there were 58 million beneficiaries and $812 billion in benefits were paid. It says it cost $6.2 billion to administration the program and has announced plans to shutter offices around the country to save money.