The trustees for the Social Security and Medicare programs are required to report the financial condition of these programs annually. These reports are of great interest to future retirees. However, I believe that our seniors, the people already using these programs, must also begin to pay attention to them.
The health or weakness of these programs will be cause for great concern for our seniors in the future. Weak programs mean weak benefits. The reports highlight some serious changes we will need to make to keep these programs strong.
The Medicare Part B physician care and Medicare Part D prescription drug benefit programs are currently in good shape financially because the government can reset Medicare rates and general revenue support each year for these programs. However, as more baby boomers enroll in these programs they will consume much higher percentages of GDP in the future. This is cause for concern for all Americans because there will only be money for Medicare, and nothing else.
The Old Age and Survivors Insurance fund, the largest part of the Social Security trust fund, probably will not run out of money until 2041. To fix Social Security we would have to increase the Social Security payroll tax from 12.4 percent to 15.6 percent, or reduce benefits immediately and permanently by 20 percent. While current recipients are in no danger of reduction or loss of benefits, the future looks to be significantly more difficult for seniors’ children.