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Social Security and Medicare insolvency looms, report warns
A new report issued by program trustees paints a concerning picture for the future of Social Security and Medicare, indicating that both trust funds could be depleted sooner than previously anticipated.
The report projects that the Social Security fund could be insolvent as early as 2033. Combining the old-age and disability funds would only offer a one-year reprieve, pushing insolvency to 2034.
This is a concerning acceleration from last year’s projection of 2035 or 2036. Medicare’s hospital insurance fund faces a similar timeline, also projected to run dry by 2033.
Treasury Secretary Scott Bessent emphasized the vital role these programs play in supporting millions of Americans and underscored the urgent need for Congressional action to ensure their long-term viability.
Without legislative intervention, automatic cuts could slash Social Security benefits by 23% and Medicare hospital benefits by 11% by 2033. Currently, these programs support approximately 70 million Social Security beneficiaries and 66 million Medicare recipients.
Both Social Security and Medicare are primarily funded through payroll taxes contributed by employees and employers. However, program expenditures routinely exceed the revenue generated by these taxes.
While the White House has voiced commitment to protecting these programs, efforts to identify and eliminate waste, fraud, and abuse within them continue. Although the Centers for Medicare and Medicaid Services (CMS) reports recent success in preventing over $100 billion in potentially fraudulent spending, this represents a small fraction of the nearly $1.9 trillion spent on Medicare and Medicaid in 2023.
CMS Administrator Mehmet Oz echoed the report’s concerns, calling for substantial and ongoing reforms to safeguard Medicare’s future.