Many posts have discussed Social Security and Medicare.
During the raucous debate surrounding the GOP-sponsored reconciliation bill, the trustees for Social Security and Medicare rather quietly released their annual reports on the status of the programs’ respective trust funds. Their projections once again show that it will not be easy to stabilize the fiscal outlook without closing the widening gap between how much is spent on these entitlement programs compared to the dedicated taxes and premiums collected to pay for them.
The core problem is a transformative demographic shift that was not anticipated when the programs were established. In 1935, when Congress approved the original Social Security law, and again in 1965, when Medicare was created, the expectation was that birth rates would remain close to their historical levels. That proved to be a costly misjudgment as family sizes began to fall sharply starting in the early 1960s and then continued to decline in the succeeding decades.
Further, while there was an expectation of improvement in average lifespans, the progress has been more rapid than anticipated.
Finally, with Medicare and Medicaid providing insurance coverage starting in the 1960s, demand for services rose precipitously, as did the prices charged by hospitals and doctors. With few exceptions, annual spending on health care has been rising more rapidly than incomes for most of the last half-century.
