The Trustees for Social Security and Medicare released their 2021 reports on August 31. In recent years the reports had been released in April. Apparently, more time was needed to compile the reports to include the effects of the COVID-19 pandemic, the associated recession and projected outlook for the programs.
Social Security Report
This year the total annual cost of Social Security is projected to exceed the program’s total annual income, for the first time since 1982 and remain higher throughout the 75-year projection period. As a result, asset reserves are expected to decline during 2021. Social Security’s cost has exceeded its non-interest income since 2010.
The Trustees projected the Social Security Old-Age and Survivors Insurance (OASI) trust fund will deplete its reserves by 2033, one year sooner than last year’s estimate, with 76 percent of benefits payable at that time. The Social Security Disability Insurance (SSDI) trust fund will become insolvent by 2057, eight years earlier than last year’s estimate, with 91 percent of benefits still payable.
The year when the combined trust fund reserves are projected to become depleted, if Congress does not act before then, is 2034 – one year earlier than last year’s projection. At that time, there would be sufficient income coming in to pay 78 percent of scheduled benefits.
“The Trustees’ projections in this year’s report include the best estimates of the effects of the COVID-19 pandemic on the Social Security program,” said Kilolo Kijakazi, Acting Commissioner of Social Security. “The pandemic and its economic impact have had an effect on Social Security’s Trust Funds, and the future course of the pandemic is still uncertain.”
Social Security makes payments to 65 million beneficiaries and 176 million workers pay into Social Security through payroll taxes.
According to the Trustees, Medicare Part A (inpatient hospital services) is expected it to run cash deficits in 2021 and every year after until it is exhausted in 2026. At that time provider and insurer payments would have to be cut by 9 percent to bring spending in line with revenue. This Hospital Insurance (HI) trust fund has not been this close to projected insolvency since 1997, when depletion was projected to be just four years away and it forced Congress to take some corrective actions.
The Supplemental Medical Insurance (SMI) Trust Fund has two accounts: Part B, which pays for physician and outpatient services, and Part D, which covers prescription drug benefits. SMI is adequately financed into the indefinite future because current law provides financing from general revenues and beneficiary premiums each year to meet the next year’s expected costs. Due to these funding provisions, the rapid growth of SMI costs will place steadily increasing demands on both taxpayers and beneficiaries. The Medicare Part B monthly premium, paid by all Medicare and Medicare Advantage enrollees, is $148.50 in 2021.
Medicare covers 62.6 million people: 54.1 million aged 65 and older, and 8.5 million disabled. About 40 percent of these beneficiaries have chosen to enroll in Part C, Medicare Advantage (MA) private health plans that contract with Medicare to provide Part A and Part B health services and most plans offer taxpayer funded special benefits that are denied to original Medicare enrollees. Centers for Medicare and Medicaid Services Administrator Chiquita Brooks-LaSure said the Medicare trust fund solvency is incredibly important and CMS is committed to working with Congress to continue building a sustainable Medicare program.
NRLN on Social Security
The NRLN was in contact with the Legislative Director for House Subcommittee on Social Security Chairman John Larson (CT-01) who introduced the Social Security 2100 Act in the 116th Congress. We learned that Representative Larson is gathering original cosponsors so when he introduces the Social Security 2100 Act in the current 117th Congress there will have more than 100 cosponsors.
The NRLN will again lobby for the passage of the Social Security 2100 Act after it is reintroduced. We anticipate the Social Security 2100 Act will again ensure funding the program for the next 75 years and change the Cost-of-Living Adjustment (COLA) from the current CPI-W pegged to urban wage earners’ living expenses to CPI-E (Elderly) based on older Americans’ spending patterns, including medical costs.
NRLN on Medicare
The NRLN is in the early stages of advocating legislation to add a low out-of-pocket cap to original Medicare. Far too many seniors in original Medicare are forced to go without critical health care because they cannot afford the out-of-pocket costs. With this additional benefit, original Medicare would be on a more level playing field with Medicare Advantage plans which are required to have an out-of-pocket cap.
We also advocate leveling the playing field with Medicare Advantage by providing original Medicare participants the same special benefits. Joe Namath and other MA commercials refer to drug plan, dental, hearing, and eye care special benefits as “free” benefits. Today, over 30 million on original Medicare who are not in Medicare Advantage plans are cheated out of these “free” benefits, though they and other Americans have to pay for them when paying income taxes. Tax subsidies, paid directly to insurance companies are used to buy these “free” benefits.
An NRLN Action Alert was issued on July 19, 2021, in support of H.R.3, Elijah E. Cummings Lower Drug Costs Now Act, and S.833, Empowering Medicare Seniors to Negotiate Drug Prices Act of 2021. Enacting either bill would allow Medicare to negotiate lower prescription drug prices. In addition, H.R.3 would cap seniors’ out-of-pocket costs for prescription drugs at $2,000 per year.
On August 24, House Democrats passed a $3.5 trillion budget framework that would include dental, vision and hearing benefits for Medicare. Senate Majority Leader Chuck Schumer (NY) has included these benefits in his outline of the Senate budget bill. If a budget is enacted that includes these benefits it would fill a major Medicare gap in coverage. Of course, the NRLN is concerned about how Congress would pay for these benefits given the financial status of Medicare noted above in the Medicare Trustees’ Report.
Remember, Seniors Are Special!