October 13, 2012

Why Social Security and Medicare are not going bankrupt

From Bold Progressive:
  • Social Security: It’s currently projected to be fully solvent until the year 2037. After that, it is expected to be able to pay out 75 percent of benefits until 2084, which basically equals full benefits, once inflation is accounted for. There is no threat of the program running out of money any time soon.  We could make it solvent far into the future if we simply raised the payroll tax cap — meaning that income above $106,000 would be taxed just like income below that amount is. Lifting the cap would require the wealthy to pay a tiny bit more so that the program would be safe and secure. Even a majority of self-identified Tea Partiers find this to be a good idea versus cutting Social Security by raising the retirement age.
  • Medicare: According to the Medicare Trustees’ annual report that was released in April 2012, “the Hospital Insurance (Part A) Trust Fund has sufficient reserves to pay out the full amount of Medicare Part A benefits until 2024 – the same projection made in last year’s report.  Should nothing else change, and the Trust Fund reserves be depleted in 2024, the Trust Fund would still receive sufficient income from the payroll taxes and other revenue through which it is funded to pay 87% of anticipated Part A expenses.” And all of that is based on a projection based on a poor economy — as the economy improves, so will the projection.  ”Medicare is not going bankrupt. Medicare would still have most of the necessary funds to pay those expenses and other parts of the program would be unaffected,” says University of North Carolina health policy expert Jonathan Oberlander in reference to the 2024 date. ”Medicare won’t go bankrupt in the literal sense in 2016 or 2024 or 2064—or ever.” Although Medicare’s financial state is secure well into the future, we can always improve it by stopping drug companies from ripping it off. We could save tens of billions of dollars every year — as Vice President Biden suggested during the debate — if we stood up to Big Pharma lobbyists by simply allowed Medicare to negotiate for drug prices.

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