What Happens When Social Security and Medicare Go Insolvent? | NTK Network What Happens When Social Security and Medicare Go Insolvent?

What Happens When Social Security and Medicare Go Insolvent?

Trustees for two of America's largest government programs warned on Tuesday that insolvency is fast approaching.

By NTK Staff | 06.06.2018 @10:15am
What Happens When Social Security and Medicare Go Insolvent?

Trustees for Social Security and Medicare warned on Tuesday that insolvency for both government programs is fast approaching: Social Security will go insolvent in 2034, and Medicare Part A will go insolvent in 2026.

Neither Congress nor President Trump has shown an appetite for making tough decisions when it comes to the entitlement programs. Due to the current state of Social Security and Medicare, and the coming crisis, it’s highly likely that spending cuts or payroll tax hikes – or both – will be needed to avoid massive, automatic benefit cuts in the coming years.

But what exactly happens if Congress and the president (whether Trump, or his successors) fail to deal with the programs before they reach insolvency?


If there’s no reform to Social Security before it goes insolvent in 2034, beneficiaries will face an automatic, immediate benefit cut of 21 percent.

CNN explains:

The trustees estimate that by 2034 the combined trust funds for Social Security — which help fund the old age and disability programs — will run dry. At that point Social Security will be able to pay only 79% in promised benefits to retirees and disabled beneficiaries.

Those projections are roughly on par with last year’s report, which estimated the combined Social Security trust funds would be tapped out by 2034 and would then only be able to pay out 77% of benefits.

For a 66-year-old receiving $1,000 a month in benefits, their check would immediately go down to just $790. For seniors on a tight budget, that missing $210 a month would have a major impact.


The Medicare hit in 2026 would not be directly on patients, but rather on the people and institutions that provide them care.

The Associated Press wrote:

For Medicare, insolvency would mean that hospitals, nursing homes and other providers of medical care would be paid only part of their agreed-upon fees.

This could create a nationwide health care crisis of epic proportions: hospitals would have to decide whether to serve the same amount of seniors for much less money, or make changes and cuts to the Medicare service they provide.

Congress and the White House may wait until the last minute to make tough reforms but, as budget hawks like the Committee for a Responsible Federal Budget have noted, the longer policymakers wait, the more drastic an impact their decisions will have.

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