Trusts running dry – A chance to return to their original intent

Monday, November 30, 2020
Chris Woodward (

Social Security check U.S. TreasuryThe Social Security trust fund is on track to run out of money in the next 10 years, and the disability insurance program will do so even sooner. So the next president is going to have to do something about it.

Rachel Greszler of The Heritage Foundation says the Congressional Budget Office (CBO) estimates that it could be 2031 for Social Security and 2026 for the disability insurance program.

"The most recent estimates that come from the Congressional Budget Office that are incorporating some of the effects of COVID-19 estimate that the Medicare trust fund will be insolvent in 2024," she reports. "So this is definitely something that the next administration will have to address."

She asserts this problem did not occur over night, but her center-right think tank headquartered in Washington, DC has some suggested solutions.

"On the Social Security side, we actually have a comprehensive and I think pretty straightforward approach there to not only make the program completely solvent, but to actually be able to reduce Social Security's tax rate by about 20% so that individuals would be paying about a 10% payroll tax instead of the current 12.4%," says Greszler. "What we do there is just very gradually shift Social Security to more of a flat-benefit structure that would do a better job of protecting people against poverty, which was the original intent of the program."

As for Medicare, Greszler thinks "it makes sense" to raise the age of eligibility to 67, which is Social Security's eligibility age. "Then you just increase that for life expectancy going forward," she suggests. "You could expand means-testing for Part B and Part D premiums so that upper-income people would pay a little bit more towards their Medicare premiums."


Right now, only about five percent of total enrollees are contributing more to that or paying a premium.

"So you could expand that to, say, 10%," Greszler continues. "You can streamline the cost-sharing and add a catastrophic cap on those, or even go so far as turning the whole program into a defined contribution system, where you just get a certain amount towards your coverage."

That, to The Heritage Foundation's estimation, would force Medicare to compete with the private plans and save anywhere between $400 billion and $800 billion over ten years.

She adds that taking these steps would raise benefits for lower-income individuals but decrease them for middle- and upper-income individuals.

"There's just some common-sense things like using a more accurate inflation index, raising the eligibility age, taking into account that life expectancy has increased by 17 years since Social Security first started," Greszler continues.

She also recommends that legislators address factors like eliminating the earnings test, "which doesn't actually cost anything or save any money, but it discourages people from continuing to work once they start collecting Social Security benefits."

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