© Reuters. FILE PHOTO A sign is seen on the entrance to a Social Security office in New York City, U.S., July 16, 2018. REUTERS/Brendan McDermid/File Photo
WASHINGTON (Reuters) – The U.S. Social Security system’s main trust fund’s reserves will be depleted in 2033, one year earlier than estimated last year, while Medicare’s finances have improved slightly, reports from the programs’ trustees showed on Friday.
The Medicare Hospital Trust Fund reserves are now expected to be depleted in 2031 compared to an estimate of 2028 made last year, due in part to new estimates showing higher revenue data.
Both the Social Security and Medicare trustees reports said that the programs’ finances are unsustainable in the long term, and Biden administration officials urged Congress to adopt President Joe Biden’s proposal to raise Medicare taxes on wealthy Americans.
Although the Social Security Disability Trust Fund is projected to be able to pay full benefits through 2097, the final year in the 75-year projection period, the combined Social Security funds would be only able to pay 80% of scheduled benefits after 2034, according to the trustees report.
The worsened financial picture for Social Security is due largely to reductions in projected economic output and productivity estimates over the forecast window that are about 3% lower than last year’s estimates, partly reflecting the effects of inflation.
Driving the three-year delay in the projected Medicare Hospital Trust Fund depletion date were projections of lower health care spending in the post-pandemic era.
A Biden administration official said this is partly because more people with significant health problems that required care died prematurely during the COVID-19 pandemic, a Biden administration official said. Current patients have fewer health problems, a trend that is expected for a few years, the official added.
Other factors for reduced projected cost include more joint-replacement surgeries being shifted to an outpatient basis, and slightly higher revenues, the official said.