Preserving Medicare and Social Security will require bipartisan effort

Last week, the Biden administration finally released the 2022 Trustees Reports for Social Security and Medicare. These annual reports to Congress — which detail the fiscal status of the Social Security Old-Age and Disability Insurance programs and Medicare Parts A, B, and D — highlighted the trusts funds for Social Security retirees and Medicare Part A are running out of money. While this year’s reports moved back insolvency dates for Medicare’s hospital fund and Social Security’s retirement fund to 2028 and 2035, respectively, we shouldn’t use an additional year or two of solvency as an excuse to delay action. Medicare and Social Security are complex, trillion-dollar programs that require bipartisan action to ensure they continue providing benefits to America’s seniors.

There are roughly 69.1 million Social Security beneficiaries in the United States and roughly 64.4 million enrollees in Medicare. These Americans — many of them our most vulnerable neighbors — rely on these programs, and it’s important we do everything we can to ensure the federal government makes good on its promise to provide these benefits.

The federal government spends money in two ways: mandatory spending happens automatically, and discretionary spending must be approved by Congress and the president — requiring debate about how much and where money is spent by government agencies. Social Security and Medicare are both mandatory programs, meaning these programs can spend their trust funds down to zero. Currently certain Social Security and Medicare programs are on track to do so. Failure to address each program in a bipartisan fashion will have real consequences for seniors.

If Congress fails to act before the Social Security Trust Fund reaches zero — meaning the Treasury must rely only on income payroll taxes to pay benefits — seniors will see their benefits automatically cut by nearly 25 percent. For a single retiree who receives a $1,600 monthly check, the national average, a 25 percent cut would reduce their payment to $1,200. For many who rely only on Social Security, this reduction of benefits would drag them dangerously close to the poverty line, even before factoring in inflation. While the benefits paid by Social Security are based on a beneficiary’s lifetime earnings, both programs pay current benefits from the incoming payroll taxes of current workers, meaning a 50-year-old who retires at age 67 in 2037 will have paid their full share of payroll taxes their entire working career, but will only receive partial benefits from Day One.

Although less tangible initially, allowing Medicare’s Part A Trust Fund to run out of money could also endanger seniors’ access to care by reducing payments to hospitals. These reduced payments would likely happen in one of two forms — either Medicare would only pay the percentage of each bill it had enough money to fund, forcing providers and hospitals to write off the rest, or it would only pay bills as funds became available — meaning a pile of unpaid bills would continue stacking up for Medicare, further endangering the program. Hospitals and doctors are not required to see Medicare patients, and many would be forced to stop accepting patients with health plans that don’t pay their bills.

Unfortunately, Democrats and the Biden administration are unwilling to take the impending threat to seniors seriously. The Biden administration continues to ignore a statutory requirement for the president to submit Medicare reform legislation to Congress when more than 45 percent of Medicare hospital spending is projected to come from general revenue, not its trust fund, within seven years. In a recent Ways and Means Committee hearing, I asked Health and Human Services Secretary Xavier Becerra if the Biden administration planned to meet this requirement — he said no.

Let me be clear: we must address Social Security and Medicare solvency in a bipartisan way. Both programs were created with bipartisan support, and no serious reform of the program has been enacted without both parties working together. No one is talking about eliminating Social Security or Medicare. We must, however, come to the table with serious solutions to ensure the federal government keeps its commitment to current and future beneficiaries. If we put partisanship aside and do the hard work now, we have options. The longer we wait, the fewer options we will have.

Smith represents Nebraska’s 3rd District and is a member of the Ways and Means Committee.