Close Close
Sign In
Newsletters
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards
Podcast Center Video Center Webcasts Resource Center Events
About ThinkAdvisor Contact Us Advertise With Us Asset & Logo Licensing Sitemap Terms of Service Privacy Policy Copyright © 2024 ALM Global, LLC. All Rights Reserved.
ThinkAdvisor
6. Delay claiming Social Security benefits.

Retirement Planning > Social Security > Social Security Funding

4 Ideas for Boosting Social Security, Medicare Solvency

By Ginger Szala

X
Your article was successfully shared with the contacts you provided.

What You Need to Know

  • To prevent Social Security insolvency, one policy expert suggested changing the eligibility age, which would be both a revenue and outlay reform.
  • When polled, people overwhelmingly say they would rather pay more than have their Social Security benefits cut.
  • Medicare Advantage needs complete accountability, and all MA and Medicare programs need to implement competitive bidding.

The Social Security Trustees Report released June 2 may have given the Old-Age and Survivors Insurance Trust Fund an extra projected year of life, it still prompted calls for reform.

The fund is on track to run out in 2034, according to the report.

As Social Security Administration Chief Actuary Steve Goss said in a Bipartisan Policy Center webinar held after the release last week, remedies would be a 25% cut in benefit payments when the trust fund goes bust or a 33% increase in payroll taxes that pay for the program — or some combination of of the two.

In a webinar held Monday by the Committee for a Responsible Federal Budget, Social Security policy experts debated the report, the insolvency issues and potential program solutions.

Moderator Josh Gordon, of the CRFB, asked panelists to discuss one thing they would do to improve trust fund solvency. Here are those responses (some which focused on Medicare):

Charles Blahous, senior research strategist, George Mason University Mercatus Center:

A win-win from a policy perspective but not from a political one is to change eligibility ages. It’s a combined revenue and outlay reform, and something that improves income security in retirement at the same time it improves program finances. …

[But] my pet reform that is much smaller financially is to change the structure of the benefit formula that now is a function of your average earnings over your lifetime. We ought to change how it works to operate on every individual year of earnings, sort of like how a private pension plan does. Each year you work, you earn X percent of your earnings that year. We should do that for two reasons: The current system uses returns of your work that drop through the floor after the magic number of 35 years.

To maintain rewards for seniors who stay in the workforce, they ought to be able to reap the benefits of that by changing how the benefits formula works. At the same time, we save money because there is a problem with the current system where it mistakes sporadic high-income earners for low-income people because it’s only looking at the average over the lifetime.

So there are folks getting windfall returns from the system when actually they are … flitting in and out of workforce earning a lot of money for the brief years they are in. So by pulling back on some of those unintended regressive income distributions, we can improve work incentives and program finances at the same time.

Kathleen Romig, director of Social Security and disability policy, Center on Budget and Policy Priorities:

We should do it primarily on the revenue side. … When you ask workers and beneficiaries “how would you like to fix Social Security’s financing problems?’” people overwhelmingly answer they would rather pay more than have their benefits cut.

… The long-term solvency gap for Social Security is about 3.5% of payroll, and that’s a manageable amount of money. There are plenty of options on the revenue side … ways we can update the system to [provide] revenues for the Social Security system. They can account for these major [work structure] changes in the last generation. And we can just ask workers to pay a little more each paycheck so they can be given benefits they’ve been promised.

Jeannie Fuglesten Biniek, senior policy analyst, Kaiser Family Foundation:

I’d like to discuss how we pay for Medicare Advantage plans [such as] how we set benchmarks, what the role of the quality bonus is, and what we expect of Medicare Advantage plans, and the information they provide back about how they are functioning. [This should include] complete encounter data, data on extra benefits that people are actually using and also appeals and denials.

In some of the cases, information is available but is incredibly difficult to pull for people to make informed choices, or to consider when making a decision. [On] revenue and spending [regarding Social Security], we’re going to have to have some combination. There’s definitely not one solution.

Brian Miller, assistant professor of medicine, Johns Hopkins University:

I agree that Medicare Advantage plans’ benchmark policy needs to be addressed. My No. 1 solution would be implementing competitive bidding for the Medicare program. We would want all plans to compete, MA plans and fee-for-service included.

Ginger Szala

@gingerszalaink

NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.