The federal government expects U.S. mortality rates to be elevated by 15% over pre-pandemic norms in 2021 and not return to normal levels until 2023, according to a report released Tuesday by the Trustees of the Social Security and Medicare programs.
The trustees concluded that these elevated mortality rates, along with lower immigration and depressed fertility rates, have had a significant effect on the trust funds supporting both programs in the short term. But the virus’ long-term effects on America’s retirement system and health care system remain unclear as the pandemic appears far from over.
More than 600,000 Americans have died from the coronavirus pandemic that began in early 2020, and case levels have increased in recent weeks, leading to projections of a spike in deaths later this year.
The new findings are from an annual report signed by four trustees responsible for tracking the health of two major U.S. trust funds supporting both Medicare and Social Security. The trustees include Treasury Secretary Janet Yellen, labor secretary Marty Walsh, acting social security administration commissioner Kilolo Kijakazi and health and human services director Xavier Becerra.
Senior administration officials described opposing forces that make it difficult to determine how exactly the pandemic could effect the country’s retirement system after 2024.
On one hand, the people who succumbed to the virus were disproportionately older and immunocompromised, one official said, meaning that the surviving population may be somewhat healthier than had been projected. But at the same time, the long-term effects of COVID-19 could create additional widespread health problems for survivors, possibly creating new problems that weigh on the Medicare system for years.
Walsh said in a news release that recent economic growth should bolster both programs for the long-term. “As our economy gets healthier, so do the trust funds that sustain Social Security and Medicare,” Walsh said. “We will continue working to deliver on the promise of financial security in retirement for all of America’s workers.”
Medicare is the country’s government-run health care system primarily for people older than age 65, as well as for younger people with disabilities. Medicare and Social Security are under pressure from long-standing demographic changes.
Aging baby boomers are placing an increasing strain on the system as they reach retirement age, leave the workforce and consume more health care services. At the same time, declining fertility rates mean the share of the U.S. working population will diminish over the next several decades.
The Medicare trust fund faces the most near-term economic challenges. The trustees’ annual reports have repeatedly warned about the encroaching insolvency of Medicare, but subsequent administrations have failed to significantly alter the program in a way that would decisively ensure its long-term solvency.
Some budget hawks and fiscal conservatives view Medicare and Social Security as unaffordable entitlements that should be reigned in rather than expanded. Some Democrats, meanwhile, are trying to expand the program’s eligibility requirements under a set of proposals being termed “Medicare for All.”
Perhaps owing to the program’s share of the federal budget – and the 61 million Americans who rely on it for things as varied as prescription medication, lab tests, surgery and hospice – efforts to modify it have been the subject of fierce partisan debate.
Another recent effort to control costs was a provision in the Affordable Care Act that established a cost-cutting panel called the Independent Payment Advisory Board, or IPAB. Falsely described by Republican critics for years as a “death panel,” IPAB was meant to reign in Medicare spending once it reached a certain threshold.
But the panel’s members were never appointed, the threshold was never reached, and it was repealed in 2016 amid a broader set of efforts to dismantle the Affordable Care Act, better known as Obamacare.
The program’s financial deficits were further worsened by the repeal of an earlier employer-sponsored excise tax that decreased the payroll taxes supporting the program, according to the Trustees’ 2020 report.
Nancy Altman, president of the liberal advocacy group Social Security Works, said she views the impending deadline mainly as a reminder to Congress to keep the fund solvent or even expand its reach.
“Those are action-forcing events … Congress has to act, and they have always done so,” Altman said. “Instead of thinking, ‘Oh my God, it’s a crisis,’ we should think, ‘I’m glad there is a very important program that the government is paying close attention to.’ ”
They estimated that the Social Security system will be able to pay its scheduled benefits on a timely basis in 2034, one year earlier than the previous year’s report had assumed. The changing forecast is from a depletion in tax income associated with the economic crisis, said a senior administration official familiar with the analysis.