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Social Security and Medicare trustees confirm: GOP policies have hurt both programs

Social Security and Medicare trustees confirm: GOP policies have hurt both programs
Shown are the headquarters of the Social Security Administration in Maryland. (Patrick Semansky / Associated Press)

The publication of the annual trustees’ reports for Social Security and Medicare has become the occasion for some of the most consistently uninformed reporting on government programs of the year.

The release of both reports Tuesday was no exception. Within moments of their appearance, the Associated Press was tweeting, and later reported, that Medicare was projected to become “insolvent” in 2026, three years earlier than was projected last year.

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Actually, no: The Medicare report projected that its hospital insurance trust fund, which applies to Medicare Part A, will be depleted in 2026. But since even then the program would be able to keep paying out more than 90% of scheduled benefits, it’s not anything like “insolvent.” As economist Dean Baker observes, at most it would be correct to say Medicare will face a “shortfall” in 2026, not insolvency.

The 2018 Trustees Report shows that the current program is fully affordable. Indeed, the United States can fully afford an expanded Social Security.


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The more glaring oversight in Tuesday’s reporting on both programs is that the trustees made crystal clear that policies of congressional Republicans and the Trump White House have damaged the financial prospects of both programs. There’s a bitter irony in that, since the GOP continually claims that it’s imperative to make both programs healthier to serve the 62 million people dependent on Social Security and 58.4 million covered by Medicare; the truth is that the Republicans are doing their best to cut the legs out from under both.

It’s proper to note, incidentally, that the trustees of both programs are mostly Republican officeholders: Treasury Secretary Steven Mnuchin, Health and Human Services Secretary Alex Azar and Labor Secretary Alex Acosta. Acting Social Security Commissioner Nancy Berryhill sits on both boards.

Here are the highlights from the reports.

First, Social Security is stable, and in some respects, improving fiscally. Its trustees expect its combined retirement and disability trust funds to become depleted in 2034, the same as was projected last year. Even then, the program would be able to continue paying out 77% of currently scheduled benefits. Since by then the scheduled benefit would be about 20% higher than it is today, the result would be close to a wash. If Congress wants to avert the cutback, nothing’s stopping it from raising the payroll tax, say by eliminating the wage cap on taxes, currently set at $128,400.

“The 2018 Trustees Report shows that the current program is fully affordable,” said Nancy Altman, a veteran Social Security advocate who is president of the group Social Security Works. “Indeed, the United States can fully afford an expanded Social Security.”

The trustees note that the fiscal condition of Social Security disability has markedly improved in the last year. Its trust fund is now expected to last until 2032, a four-year improvement over last year’s projection of depletion in 2028. The trustees attribute that improvement to a steady decline in disability caseload and new applications dating back to 2010. That gives the lie to a recurrent Republican meme that disability is little more than a haven for layabouts and malingerers.

The trustees, meanwhile, give details on how congressional and White House initiatives have harmed Social Security. First, they mention that Trump’s rescission of Deferred Action for Childhood Arrivals, the program that allowed children brought to the United States illegally by their parents to stay and become productive members of society, will reduce the number of workers paying into the program. That will reduce payroll receipts slightly but significantly in the near term; because those people won’t be receiving benefits decades from now, the system costs will be lower, but the impact of Trump’s decision still will be negative.

The tax cuts enacted by Republicans and signed into law by Trump in December also will have a negative effect on Social Security in the near term, chiefly by reducing the program’s income from the taxation of benefits. “As a whole, the law has a significant net negative effect on the financial status of the OASDI program [that is, the retirement and disability components together] over the short-range projection period and a negligible net positive effect over the long-range projection period,” the trustees said.

GOP policies are projected to have a more significant effect on Medicare, according to its trustees report. A key factor is the elimination of the Affordable Care Act’s individual mandate, which was effectively canceled as of 2019 when the tax cut bill reduced the penalty for not having insurance to zero.

The Medicare trustees note that the Affordable Care Act resulted in “significantly fewer uninsured” Americans treated at hospitals, but that trend now is likely to be reversed. The trustees reckon that the resulting increase in the number of uninsured Americans will raise costs for hospitals required to provide uninsured persons with services, and in turn increase the disproportionate share of subsidies paid to those hospitals via Medicare.

The Republican-controlled Congress also eliminated the Independent Payment Advisory Board, which had been established by the Affordable Care Act “to develop and submit proposals aimed at extending the solvency of Medicare, slowing Medicare cost growth, and improving the quality of care delivered to Medicare beneficiaries.” The elimination leaves no mechanism in place to achieve those ends, the trustees reported. Finally, the tax cuts will also reduce income for Medicare, as they do for Social Security.

Social Security and Medicare have proved remarkably resilient in the face of decades of efforts by conservatives to undermine them. The reports issued Tuesday document that they’re still in reasonably good health — but that those attacks are beginning to have their effect. If Republicans really are committed to strengthening them for the future, as they claim, the time to stop attacking them is now.

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