The new health care law has significantly improved the prognosis for Medicare, extending the life of its trust fund by 12 years until 2029, and thereby delaying any need for dramatic changes in benefits or revenues, according to a new report.
The annual check-up from government actuaries overseeing the nation’s two central safety-net programs also found that Social Security continues to be much less of a problem than Medicare, and will remain in strong financial shape at least through 2037.
“The financial outlook for the Medicare program is substantially improved as a result of the far-reaching changes in the Patient Protection and Affordable Care Act,” concludes the Medicare report — although the trustees warned that the improvements depend on the successful implementation of the law.
Social Security, according to its annual report, is expected to pay out slightly more in benefits than it receives in payroll tax this year, for the first time since changes were made in 1983. But payroll taxes are only one source of income for the program, and with the others — including interest income on its $2.5 trillion trust fund, held in special
issue U.S. Treasury securities — the program is expected to continue to run a surplus until 2024.
The program will need to start spending from its trust fund in 2025, with that fund becoming exhausted in 2037, which is consistent with last year’s estimate. But at a press conference Thursday, Social Security Commissioner Michael J. Astrue, one of the government trustees releasing the report, begged reporters not to scare the public by exaggerating the significance of trust fund exhaustion
“That does not mean that there will be no money left,” Astrue said. At that point, even if Congress took no action, Social Security could still pay out 78 percent of expected benefits from annual revenues. “That would be a bad result, but it is a far cry from having no benefits at all,” he said.
Inaccurate reporting on the topic tends to “make young people despair about Social Security,” he said.
The program, signed into law in 1935 by Franklin Delano Roosevelt, has served as an economic lifeline for millions over the past 75 years. “I’m excited about the next 75 years of Social Security, and you should be too,” Astrue said.
Astrue said that both reports taken together, along with recent analyses by other groups such as the Congressional Budget Office, show that the new health care law will result in “very, very, very substantial improvements in the rate of growth of health care costs… on a scale that make a very substantial impact on that piece of our long-term fiscal challenges.”