Financial Advice for Retirement, Social Security, IRAs and Estate Planning

AARP’s Take On The Medicare Trustees’ Report

June 13, 2018

The recent annual report of the Trustees of Social Security and Medicare made a lot of headlines, and AARP didn’t like all of them. The organization responded with a different take than some of the media coverage. AARP argues that the programs will be able to pay most promised benefits indefinitely and could pay all of them with relatively modest adjustments in policies, not with higher taxes and significant benefit cuts.

Let’s set the record straight: First, Medicare is not going broke. Second, the Trustees Report is not even saying that Medicare won’t be able to pay for hospital services.

Even if the Hospital Insurance trust fund were to be depleted, Medicare would still be able to meet 91 percent of its obligations for hospital services. And, as it has done in the past, it could make adjustments to address the remaining shortfall without resorting to draconian changes to the program or imposing large costs on people with Medicare. According to a recent study, “…the [Medicare] trust fund has been projected to reach insolvency within 12 years or less in 22 of the annual reports issued since 1970, six of which predicted that the trust fund would be ‘broke’ within five years or less.” (Emphasis added.)

 

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