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In their current state, Social Security and Medicare are necessary but unsustainable programs. I believe that in order to save these important programs for future generations, they must be reformed. I do not support eliminating them, nor do I support making any changes that would affect anyone currently 55 or older. However, I do want to make these programs more sustainable for the long term.
Today, Social Security, in combination with Medicare, makes up over one-third of all spending by the federal government and will continue to be one of the fastest growing areas of the federal budget. This looming crisis must be addressed as part of any serious proposal to return spending to sustainable levels. Without improvements, both Social Security and Medicare will be unable to fully meet the promises made to the next generation of retirees and will thus burden future generations with lack of care and crushing tax increases. Even worse, without change, both programs risk complete collapse before our children and grandchildren ever receive a single benefit.
As you know, Social Security provides supplemental income to today’s retirees. The money current retirees “paid in” during their working years went primarily to pay their parents’ benefits, while some money also went into the Social Security trust fund which is expected to be spent over the next two decades. In the 1960s, there were sixteen workers paying into Social Security for every one person receiving benefits. Today, that ratio stands at three workers for every beneficiary, a severe decline. This structural imbalance must be addressed with comprehensive reform.
The Social Security Board of Trustees recently issued a report about the financial health of the Social Security Trust Fund, explaining it will go broke as early as 2036. After the fund runs out of money, it will self-adjust automatically and pay out an estimated 77 % of the expected benefits to all future beneficiaries. The benefits being paid out will continue to decline over time, even as payroll taxes stay at current levels. The Social Security Board of Trustees has demonstrated that as the funds continue to dwindle, Social Security will need an additional $6.5 trillion dollars to pay all of the scheduled benefits for the next 75 years. Many senior citizens currently rely on Social Security and Medicare benefits, and this need will not change for younger generations of Americans. Congress must maximize the effectiveness of these programs so benefits will be available when needed.
On Friday, May 13th, the Medicare Board of Trustees issued their annual report on the long-term financial stability of the Medicare program. Included in their report was their troubling estimate that the insolvency date of Medicare was moved up from 2029 to 2024, the second sharpest annual decline in Medicare’s solvency. Furthermore, Medicare is taking a disproportionate amount of funding from general revenues, severely impacting the funding of other federal programs and putting our nation further into debt.
In early 2011, , Rep. Paul Ryan (R-WI), Chairman of the House of Representatives’ Committee on the Budget, released a budget proposal which included reforms to strengthen and protect the Medicare program through giving states and beneficiaries more control over Medicare benefits and decisions. Since then, Chairman Ryan has worked with Democratic Senator Ron Wyden of Oregon to develop a new plan.
The Wyden-Ryan Medicare plan would offer seniors the option of choosing from the traditional Medicare plan or Medicare-approved private plans starting in 2022. Supporters of this plan believe that the number of choices for consumers, both private and government run, will drive Medicare and insurers to be more efficient and price conscious while maintaining a high level of care. This plan has yet to go through the normal legislative process in both the House of Representatives and Senate, and I am continuing to assess the merits of this plan.
The Wyden-Ryan plan, while not perfect, has started a dialogue in Congress on an issue that has not been addressed in many years. Congress must not deny the insolvency of the Medicare program which is slated to go broke within the next fifteen years. The imbalance of those paying in to Medicare and the spiraling costs of healthcare for seniors is a cause for great concern. Medicare’s structural problems must be addressed in a fair and comprehensive manner.
Our nation’s financial situation requires that we carefully examine the future of Medicare and Social Security. Without reform, these programs will be unable to fully meet their promises to the next generations of retirees. If we are to continue providing these safety nets for Americans, we must ensure the programs’ long term sustainability. Some reforms under consideration include raising the retirement age for young American’s just starting their careers, raising or eliminating the cap on payroll taxes for higher wage earners, or creating incentives for personal retirement and healthcare savings. As you know, any change will have consequences and should only be made after extensive research and deliberation. All options must remain on the table in order to strengthen and preserve this vital program.
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