“The Social Security and Medicare administrators’ reports released today send a clear message to Congress: Despite the short-term improvement, you must act to protect the benefits people have earned and to which they have paid out now and for the long term,” said AARP CEO Jo. Ann Jenkins said in a statement after the reports were released. “The stakes are too high for the millions of Americans who depend on Medicare and Social Security for their health and financial well-being.”

In a call with reporters, a Biden administration official said the economic recovery from the 2020 recession “was both stronger and faster than originally expected,” and that led to higher projections. optimistic, largely due to increased payroll tax revenue. The official also said that due to recent increases in the Consumer Price Index (CPI), the government’s main indicator of inflation, the Social Security Cost of Living Adjustment (COLA) for 2023 could be 8%. That would exceed the 5.9% hike – the biggest annual increase in monthly benefits in four decades – that beneficiaries have received this year.

Another administration official said administrators estimate that the current base monthly premium for Medicare Part B will remain stable at $170.10 in 2023. Part B covers doctor visits, diagnostic tests, and d other outpatient services. Health and Human Services Secretary Xavier Becerra recently said there may be savings for Part B enrollees next year due to planned lower prices and expenses for Aduhelm, a new drug for Alzheimer’s disease. The COLA and Part B premium for 2023 won’t be final until the fall, when more recent cost-of-living and Medicare spending data becomes available. Part B premiums are usually deducted directly from Social Security benefits.

Medicare Trust Funds

The 2022 report finds that the Medicare Part A Hospital Insurance (HI) trust fund, which pays for hospitalization costs, could run out of money in 2028, two years later than last year’s report estimate . According to administrators, if nothing changes, in 2028 incoming revenues would still cover 90% of Medicare costs.

During the pandemic, especially early on, hospitals were overwhelmed with COVID cases, many frail Medicare beneficiaries succumbed to the disease, and many elective procedures were put on hold. For this reason, according to the report, the increase in spending to care for Medicare COVID patients has been more than offset by the decrease in non-COVID care. Administrators expect pre-pandemic health spending levels to return by 2024.

The Supplemental Medical Insurance (SMI) trust fund for Medicare Part B, which pays for physician and outpatient services, and Part D, which covers prescription drug benefits, is solvent indefinitely, funded from general revenue and beneficiary premiums.

Social Security Trust Funds

The trustees also reported on the two social security trust funds – the one that helps pay retirement and survivors’ benefits (the Old Age and Survivors’ Insurance Trust, or OASI) and the Disability Insurance Fund (DI ). Based on the trustees’ current projections, the AVS trust fund could run out in 2034, a year later than the trustees projected in their 2021 report. After that, the program could pay out 77% of profits from incoming revenue. The report says the AI ​​fund that covers disability benefits will not be depleted at all for at least the next 75 years, the first time since 1983 that this fund will be solvent for that entire projection period.

The trustees have also published a forecast of the lifetime of the combined AVS and AI assets in the social security trust funds. They estimated that the combined trust funds could run out in 2035, a year later than predicted in their 2021 report. After that, the combined trust funds would, in theory, be able to pay around 80% of profits from revenues. incoming.

“Directors recommend that legislators address projected trust fund shortfalls quickly to phase in the necessary changes and give workers and beneficiaries time to adjust to them,” the Social Security report said.

Dena Bunis covers Medicare, health care, health policy and Congress. She also writes the “Medicare Made Easy” column for the AARP Bulletin. An award-winning journalist, Bunis has spent decades working for metropolitan dailies, including as Washington bureau chief for the Orange County Register and as a health and workplace policy maker for news day.