Social Security and Medicare are Financially Sound, Not “Going Bankrupt,” says Trustees Report
The 2017 OASDI Trustees Report confirms that the Social Security Trust fund is stable and healthy for now, but faces challenges in the future if corrective action is not taken. The most important figures remain consistent with last year’s report: The combined OASDI (Old-age, Survivor, and Disability Insurance) trust funds will remain fully solvent until 2034, after which Social Security can pay 77% of benefits if there are no changes to the program. The Trustees report there is now $2.847 trillion in the Social Security Trust Fund, which is $35.2 billion more than last year — and that it will continue to grow by payroll contributions and interest on the Trust Fund’s assets.
This reassuring report will not stop Social Security’s opponents from seeing the glass half-empty and claiming that the program is in dire financial trouble. Expect to hear more false cries about Social Security (and Medicare) going “bankrupt” in the coming months.
“Opponents of Social Security may once again try to use this report as an excuse to cut benefits, including raising the retirement age. We must, instead, look to modest and manageable solutions that will keep Social Security solvent well into the future without punishing seniors and disabled Americans.” – Max Richtman, NCPSSM president and CEO
The National Committee endorses bills introduced by Senator Bernie Sanders (I-VT), Rep. John Larson (D-CT) and others, which keep the Social Security trust fund solvent while boosting benefits and cost-of-living adjustments (COLAs). The bills achieve this mainly by phasing out the payroll tax income cap so that the wealthy pay their fair share into Social Security.
Forty percent of seniors (and 90% of unmarried seniors) rely on Social Security for all or most of their income. The average monthly retirement benefit of $1,355 is barely enough to meet basic needs, and the Trustees’ latest projected cost-of-living increase of 2.2% will not keep pace with seniors’ true expenses.
The news media touted the 2.2% bump for 2018 as “the largest in several years.” While it’s true that next year’s COLA is far superior to this year’s 0.3% increase, it is still woefully inadequate. What the media don’t always explain is that a 2.2% increase translates into an extra $28 per month – hardly a fortune for seniors struggling to meet rising expenses on fixed incomes. A single co-pay for a prescription or a trip in a wheelchair van could easily gobble up $28, if not more.
Currently, Social Security cost of living increases are pegged to the Consumer Price Index for Wage Earners or CPI-W. This index does not reflect seniors’ true expenses. Older Americans pay a disproportionate share of their limited incomes for items like housing and medical care compared to younger wage earners. The National Committee advocates the adoption of the Consumer Price Index for the Elderly (CPI-E), which tracks rising costs for the goods and services seniors actually spend their money on. The leading categories are Housing, Transportation, Food and Medical Care. As the National Committee’s Webster Phillips told CBS Radio News:
“The consumer price index for the elderly (CPI-E), which is focused on the spending patterns of seniors, is a better measure of inflation as it affects older people’s consumption patterns.” – Webster Phillips, NCPSSM Senior Policy Analyst, 7/13/17
On Medicare, the Trustees report shows that the Part A Trust Fund will be able to pay full benefits until 2029, and 88% thereafter if nothing is done to bolster the system’s finances. Depending on what the final version looks like, the Republican healthcare plan could reduce the solvency of Medicare by two years. The National Committee opposes the GOP health plan and rejects efforts to privatize Medicare – which Speaker Ryan and the House Republicans have promised to undertake during the budget resolution process for 2018.
Instead of privatization, the National Committee champions innovation and continuing efficiencies in the delivery of care, allowing Medicare to negotiate prescription drug prices, and restoring rebates the pharmaceutical companies used to pay the federal government for drugs prescribed to “dual eligibles” (those who qualify for both Medicare and Medicaid) – in order to keep Medicare in sound financial health.