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The Social Security Office is seen in Alhambra, California in 2017. Photo by Mario Anzuoni/Reuters

Medicare and Social Security stay on unsustainable financial paths, reports show

Despite the lack of big short-term changes, both Medicare and Social Security remain on unaffordable financial paths that will, without serious reforms, soak up ever-larger shares of government spending, according to annual report cards released by the programs’ trustees on Monday.

The outlooks showed only slight changes from last year’s reports.

However, the trustees did project a 6.5 percent increase in Medicare’s benchmark Part B monthly premium next year, estimating it would rise from $135.50 this year to $144.30 in 2020. The Part B premium, which is deducted from Social Security payments for people who are enrolled in both programs, was $134 a month in 2017 and 2018.

The higher premiums in 2020 will offset some of the 2020 cost of living adjustment (COLA) for Social Security benefits that will be announced this fall.

In the Social Security report, the program’s overall solvency was extended to 2035 from 2034 last year, due to significant changes in the program’s disability insurance (DI) fund. It is now projected to have enough funds to pay all claims until the year 2052, an unexpected 20-year improvement from last year’s reports. When it does run short of money, disabled beneficiaries would still receive 91 percent of their benefits.

“The large change in the reserve depletion date for the DI Fund is mainly due to continuing favorable trends in the disability program,” Acting Commissioner of Social Security Nancy Berryhill said in a statement. “Disability applications have been declining since 2010, and the number of disabled-worker beneficiaries receiving payments has been falling since 2014.”

Social Security’s primary retirement fund is expected to run short of funds beginning in 2034, at which time it would be able to pay out 77 percent of its benefit obligations. The numbers are unchanged from last year.

In the Medicare report, the program’s Part A hospital fund is projected to have enough reserves to pay all claims until 2026 – the same outlook as last year. The much larger fund that supports spending for Parts B (doctors, outpatient costs, and equipment expenses) and D (prescription drugs) is funded largely by taxpayers from each year’s federal budget.

While that fund is, thus, in no danger of running out of money, the cumulative impact of rising health care costs got a bit worse during the past year. This year’s report said total government spending on Medicare will rise from 3.7 percent of the nation’s gross domestic product in 2018 to 5.9 percent by 2038.

The outlooks in both reports assume no major changes in program rules. However, House Democrats support a comprehensive Social Security overhaul that was explained in an earlier Ask Phil column. Numerous Medicare reform proposals are also under review, including bipartisan support in Congress to rein in runaway prescription drug prices.


“Ask Phil,” aims to help older Americans and their families by answering their health care and financial questions. Phil is the author of the book, “Get What’s Yours for Medicare,” and co-author of “Get What’s Yours: The Revised Secrets to Maxing Out Your Social Security.” Send your questions to Phil.

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