- Social Security’s total expenditures have exceeded its non-interest ‘income’ since 2010 and the program’s trustees estimate that the shortfall, already about $76 Billion a year, will start rising steeply after 2018.
- Medicare has nearly $40 trillion in unfunded obligations; its Hospital Insurance Trust Fund, already paying out more than it takes in, will be depleted in less than 15 years.
- Medicaid is a joint Federal-State program. In addition to the nearly $300 billion in federal spending, the states spend another $200 billion on Medicaid and on average it costs between one-sixth and one-fifth of their total budgets. Unreformed, state and federal Medicaid spending will balloon to almost $850 billion by 2023 (from about $500 billion now), much of that growth due to Obamacare provisions expanding program eligibility and thus increasing the number of beneficiaries.
It’s past time to get serious about reforming these programs; together they account for about 45% of total federal spending and will soon top 50%.
There are few easy choices here, but there are many promising ideas for reining in the problem which, unresolved, will only get worse – dangerously so – the longer it persists.
Proposals like block-granting Medicaid, converting Medicare to a premium support program and similarly revising Social Security by giving workers more control over their retirement savings and investments have to be considered.
It would also be worth considering proposals to gradually raise the eligibility age for these programs and for means-testing them. Limiting Social Security and Medicare benefits for more affluent retirees who would need them less, or not at all, could provide significant savings to the system.