Maya MacGuineas, president of the Committee for a Responsible Federal Budget, raises concerns about the sustainability of Social Security and Medicare, citing the Biden-Harris administration's recent move to mask Medicare premium increases.
Maya MacGuineas, president of the Committee for a Responsible Federal Budget, has expressed deep concerns about the future of Social Security and Medicare, warning that the programs are "headed toward insolvency." The Biden-Harris administration's recent move to leverage taxpayer funds to mask upcoming Medicare premium increases has drawn criticism from experts, who argue that it is merely a temporary fix that will ultimately exacerbate the problem.
According to the Inflation Reduction Act (IRA), insurers are poised to significantly hike monthly premiums for Medicare Part D plans, with average bids expected to triple by 2025. In response, the Centers for Medicare and Medicaid Services (CMS) rolled out a three-year "demonstration project" to subsidize these premiums, aiming to keep them artificially low. However, critics say that this move will shift costs to taxpayers, dramatically increasing subsidies from $30 per recipient per month in 2024 to $142.70 in 2025.
Social Security and Medicare's Grim Outlook: 'Insolvency' on the Horizon
Former President Trump adviser Joe Grogan has criticized the maneuver, calling it "a death spiral" and arguing that it will not provide real relief. He points out that premiums will still go up, and that the demo project is already broken. Paragon Health Institute, a health care research group, has also condemned the CMS demo plan as a "fake, costly demonstration." The institute argues that the subsidy scheme is not a true demonstration and that it will ultimately harm the program.
Research published by Fidelity, an investment research group, shows that a 65-year-old retiring today can expect to spend $165,000 on health care in retirement, a 5% increase from last year and more than double the estimate from 2002. However, there appears to be a significant disconnect between the actual projected cost of health care and how much Americans expect to spend on those expenses. The average American thinks they will spend about $75,000 on health care and other medical expenses, less than half of Fidelity's calculation.
Social Security and Medicare's Grim Outlook: 'Insolvency' on the Horizon
The estimate assumes that an individual is enrolled in Medicare, including Part A, Part B, and Part D. Other expenses such as Medicare premiums, over-the-counter medications, dental and vision care, and other costs not covered by Medicare are "left to retirees to manage on their own."
As of April of this year, about 67.3 million Americans were enrolled in Medicare. Of those, about half were enrolled in a Medicare Advantage plan, while about 80% were covered by Medicare Part D.
Social Security and Medicare's Grim Outlook: 'Insolvency' on the Horizon
Critics have accused the Biden-Harris administration of attempting to shield itself from election fallout by masking the Medicare premium increases. They argue that the administration is merely delaying the inevitable and that the program's financial problems will only worsen in the future.
The administration has not responded to requests for comment on the matter.
Social Security and Medicare's Grim Outlook: 'Insolvency' on the Horizon
In addition to the concerns about Medicare, there are also growing financial pressures on Social Security. The Social Security Trust Fund, which pays for benefits, is projected to be depleted by 2035. This means that unless Congress takes action, Social Security benefits will have to be cut by about 20% across the board.
The combination of the financial challenges facing Social Security and Medicare has led some experts to warn that the programs are facing a "ticking time bomb." They argue that unless Congress takes action to address the problem, the programs will eventually become insolvent and unable to provide benefits to future retirees.
