Social Security and Medicare Trustees Reports

In response to the Social Security and Medicare Trustees reports released today, CEPR senior economist Dean Baker issued the following statement:

"There were few notable changes in the 2018 trustees reports. In the case of the Social Security trustees report, the changes were minor, with the overall balance deteriorating slightly because of the change in the 75-year horizon. (The year added to the horizon -- 2092 -- looks worse than the year it replaces, 2017.)

"However, there is a noteworthy deterioration in the projected balance for Medicare. The 2018 report projects a shortfall over the 75-year horizon of 0.82 percent of payroll. This compares to a projected shortfall in the 2017 report of just 0.64 percent of payroll. This is due to the more rapid projected growth in spending in the immediate future. The date when the program is first projected to face a shortfall is now 2024 rather than 2029, which was projected last year.

"The new projections show Medicare spending in 2024 at a level 1.6 percent higher than the projection from 2017. By 2030, spending is projected to be 3.3 percent higher than the projection from the 2017 report.

"It is worth noting that Medicare's finances had improved enormously under the Obama administration. The 2009 trustees report, the first of the Obama administration, projected a shortfall over the 75-year horizon equal to 3.88 percent of the projected payroll. At the time, the projected shortfall in Medicare was almost twice as large as the projected shortfall in Social Security, which was 2.0 percent of payroll.

"The 2009 report also projected that by 2018, Medicare's expenses would be 4.12 percent of payroll. By comparison, the report released today puts Medicare spending at 3.42 percent of payroll. If Medicare spending had continued on the path projected in 2009, it would already be facing a shortfall.

"The extent to which the policy changes of the Obama years slowed the course of spending can be debated, but it is indisputable that spending slowed sharply from its projected path. Unfortunately, it now appears to be accelerating again. The 2018 projections already imply a long-term shortfall that is almost 30 percent larger than the shortfall projected in 2017. This is a disturbing change that hopefully is not part of a trend towards higher projected and actual cost growth."