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Social Security and Medicare Near Insolvency

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As the Democratic Party and it’s 2020 presidential candidates tout Medicare for all, the program is nearing the breaking point.

Medicare and Social Security, plans that employed workers pay into with the promise of retirement benefits and secure health care, are approaching insolvency at breakneck speed. The overseers of both programs said, in a report on Monday, that Medicare would reach insolvency in 2026, and Social Security would run out of reserves in 2035.

President Trump has declared cuts to the program off-limits. Instead, White House Press Secretary, Sarah Sanders, called for Congress to work with the president to lower costs and eliminate fraud and abuse. She also criticized the Democrats’ demands to expand Medicare, saying it would be one more step to government control of health care, reducing access for seniors and being even more of a strain on the government’s budget.

On the cutting block are inflation increases for Social Security (projected to be 1.8%  for 2020), raising payroll taxes or retirement age.

Social Security’s acting commissioner, Nancy Berryhill, urged lawmakers to “take action sooner rather than later to address these shortfalls, so that a broader range of solutions can be considered and more time will be available to phase in changes while giving the public adequate time to prepare.”

If Congress doesn’t act, both programs would eventually be unable to cover the full cost of promised benefits. With Social Security that could mean automatic benefit cuts for most retirees, many of whom depend on the program to cover basic living costs.

For Medicare, it could mean that hospitals, nursing homes, and other medical providers would be paid only part of their agreed-upon fees.

The single bright spot in the otherwise dismal report: Social Security’s disability program is now estimated to remain solvent for an additional 20 years, through 2052.

Experts say a payroll tax increase of nearly 1% or a 19% cut in spending would be needed to address the Medicare issue. Both programs combine to make up 45% of the federal budget each year. Social Security cost $1 trillion last year, and Medicare, including patient care and prescription programs, totaled nearly $750 billion. Increased taxes or cuts to programs are something neither side seems willing to commit to.

Maya MacGuineas, the president of the Committee for a Responsible Federal Budget, expressed her frustration. “That fact that we now can’t guarantee full benefits to current retirees is completely unacceptable,” she said, “and it should be cause enough for every policymaker to rally around solutions to restore solvency to those programs. Certainly we should be focused on saving Social Security and Medicare before we start promising to expand these programs.”

“Now isn’t the time for partisan bickering,” she said.

Sarah Morton

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