Aid programs already in doubt
Medicare, Social Security imperiled even without virus effect
WASHINGTON — The financial condition of the government’s two biggest benefit programs remains shaky, with Medicare expected to become insolvent in just six years, while Social Security will be unable to pay full benefits starting in 2035, the government said Wednesday.
And that’s before factoring what officials acknowledge will be a substantial hit to both programs from the coronavirus pandemic.
The depletion dates, which remained unchanged from last year’s estimates, were revealed Wednesday with release of the annual trustees reports of both programs. When Social Security’s reserves are exhausted in 2035, the program will only be able to pay 79 percent of benefits at that time.
Even if employment rebounds by the end of this year and payroll taxes return to near-normal levels, the shock from the pandemic shutdown could accelerate the depletion of the Social Security trust fund by about six months, officials told reporters.
If a recession extends into next year, it could mean that a depletion would come a full year earlier. The consequences may be worse for the Medicare program, which in this report is estimated to deplete its reserves in 2026.
The expected recession, projected by economists to be the deepest since the 1930s, will mean fewer people paying into Social Security and Medicare. Compounding the problem, the pandemic will impose heavier caseloads on the health program, which provides care for those 65 and older.
William Arnone, CEO of the nonpartisan National Academy of Social Insurance, which works on education and policy, said that next year’s report will be much more important because it will take into account the impact of the pandemic.
More than 20 million workers have been laid off. As a consequence, they and their employers are no longer sending in payroll taxes to support Social Security retirement benefits and Medicare’s giant trust fund for inpatient care.
People forced to retire because of job loss could see their lifetime Social Security checks reduced because the earnings they expected to receive from work won’t be factored into the calculation of their benefits.