Here it is in a nutshell…the truth about the2010 Social Security and Medicare Trustees Report.Of course, the facts don’t fit the crisis calls from fiscal hawks and the main stream media so don’t be surprised when most of thesedetails don’t make the headlines in your local papers tomorrow.Social Security is still fully funded for 27 years, a COLA increase unlikely for the second year in a row, and health care reform extends Medicare?s solvency
- The 2010 Trustees report shows recently enacted health care reform will strengthen Medicare.
Trustees project that health care reform?s Medicare provisions will extend solvency 12 years, from 2017 to 2029.Health care reform was a vital first step; however, the work is not finished. Congress must continue to address long-range cost containment in private health care systems to avoid creating provider access problems for Medicare beneficiaries.The 2010 Trustees report shows Social Security is not facing an immediate threat.
- Trustees project Social Security will be able to pay full benefits until the year 2037. After that, Social Security will have sufficient revenue to pay about 78% of benefits.
- Low inflation means 2011 is likely to be the second year of no cost of living allowance for beneficiaries. By statute, zero COLA?s would also mean no Medicare Part B premium increase for about three-quarters of all beneficiaries. However, the remaining beneficiaries, including newly enrolled seniors and higher income seniors, will see larger premium hikes in Part B to cover the difference. Premiums for Part D, the prescription drug benefit, are not subject to this limitation and are expected to continue increasing.
- The change in short-term projections is a short-term fiscal problem, not a Social Security problem. What is happening is the annual cash surpluses collected in payroll taxes only (ignoring other revenue sources like trust fund interest) are projected to be down for 2010 and 2011, not surprising given the high unemployment rate that the country is experiencing. Fewer workers mean fewer contributions. But the economy will rebound, and in the meantime the program is able to rely on income from interest on the $2.5 trillion in reserves the Trust Fund has accumulated. Annual fluctuations such as these are anticipated in the long-term projections by the Trustees ? confirmed by the fact that the insolvency projection in 2037 has not changed.
- The Disability Trust Fund faces a more immediate threat. Trustees project the DI Trust Fund will be exhausted in 2018 and recommend a reallocation of the payroll tax rate between OASI and DI, as was done in 1994.
?The 2010 Social Security Trustees Report confirms that the Social Security program is weathering these difficult economic times, providing stability and security to millions of Americans rocked by the recession. In the face of this adversity, the Social Security program has stood its ground, and remains able to pay all benefits through 2037, the same date the Trustees projected last year. Americans should be encouraged by this good news from the Trustees? Report. And contrary to the doom and gloom crowd?s crisis calls, the Medicare Trustees confirm recently enacted Medicare reforms will add years to that program?s solvency.?…Barbara B. Kennelly, President/CEO, The National Committee to Preserve Social Security and Medicare