{"id":6327,"date":"2026-07-03T08:33:31","date_gmt":"2026-07-03T08:33:31","guid":{"rendered":"https:\/\/orlandorelocationreport.com\/?p=6327"},"modified":"2026-07-03T08:33:31","modified_gmt":"2026-07-03T08:33:31","slug":"commentary-social-security-and-medicares-insolvency-dates-dont-matter-insolvency-does","status":"publish","type":"post","link":"https:\/\/orlandorelocationreport.com\/?p=6327","title":{"rendered":"Commentary: Social Security and Medicare\u2019s insolvency dates don\u2019t matter. Insolvency does"},"content":{"rendered":"
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To no one\u2019s surprise, the newly released 2026 Social Security and Medicare trustees reports paint a dire picture. Social Security\u2019s combined trust funds are still headed towards insolvency, as is the only Medicare trust fund that can even become insolvent. That may be why so many headlines focus on projections of exactly when the doomsdays will arrive: 2032 for Social Security\u2019s Old-Age and Survivor (OASI) Trust Fund and 2033 for Medicare\u2019s Hospital Insurance (HI) trust fund.<\/p>\n

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These dates aren\u2019t what matters.<\/p>\n

If you go to an annual checkup and learn you have a potentially terminal disease, what matters for the moment isn\u2019t whether your doctor expects you to live until 2032 or 2033. You don\u2019t sit back and hope that next year, she\u2019ll revise the guess to 2034. Right now, what matters is finding a cure and getting treatment underway. And that\u2019s where the news for Social Security and Medicare is bleakest.<\/p>\n

Social Security\u2019s shortfall could have been easily eliminated many years ago with a simple, modest tweak to the statutory formula that automatically increases benefits each year. Lawmakers, afraid of the politics of a \u201ccut,\u201d procrastinated. Now, the substantive problem is much bigger, and thus the political obstacles as well.<\/p>\n

The gap is now so large that Social Security can no longer be realistically cured by cost containment alone, tax increases alone, or eligibility age adjustments alone. To fix the problem solely by increasing payroll taxes, the current 12.4% Social Security tax rate would need to rise overnight to 16.65% \u2014 something even the most left-leaning Congress wouldn\u2019t do. Even the most fiscally conservative Congress would not cut benefits for all new claimants by the necessary 30% across the board. Chopping these measures down to tolerable, politically realistic sizes requires blending them with each other and with eligibility age adjustments.<\/p>\n

Postponing treatment is almost always worse. If lawmakers wait until near the projected depletion date of Social Security\u2019s combined trust funds (2034), even cutting off all new benefit claims entirely will not avert insolvency.<\/p>\n

It\u2019s important not to become numb to these facts. At stake is nothing less than whether Social Security can remain a reliable source of benefits. There\u2019s a reason why it currently enjoys political support that welfare programs lack.<\/p>\n

We finance welfare programs out of the general fund with our income taxes (which not everyone pays), while eligibility is a function of need. Taxpayers and welfare beneficiaries represent competing interests, so there is a continual renegotiation. From one Congress to the next, we keep changing welfare benefit rules: who\u2019s eligible, what they need to do to collect, and what those benefits will be.<\/p>\n

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<\/p>\n

By contrast, people can and do make long-term income plans around their expected Social Security benefits, because these are tied to what participating workers contributed. That\u2019s why politicians can\u2019t arbitrarily take them away. But the structure only works as long as benefit formulas align with what payroll taxes can fund. Under current law, they don\u2019t.<\/p>\n

If lawmakers don\u2019t fix that soon, we can\u2019t have this kind of Social Security system anymore. Benefits would be disconnected from participant contributions and become much less predictable.<\/p>\n

Medicare is in the same boat with Social Security in that Hospital Insurance will go insolvent unless lawmakers either reduce its costs (by 12%) or increase its tax collections. But its largest trust fund (Supplementary Medical Insurance, or SMI), which is growing even faster than HI, poses an additional problem.<\/p>\n

Solvency is meaningless for Medicare SMI. SMI is automatically given whatever revenues it needs, charging higher premiums on participants and receiving increased funding from the general treasury. This is why Medicare is the single biggest driver of skyrocketing federal deficits.<\/p>\n

<\/p>\n

The annual trustees\u2019 reports should serve as a wake-up call, and louder than the last. Swift and decisive measures are necessary to preserve Social Security and Medicare in the forms we Americans know, rely on, and support.<\/p>\n

Charles Blahous is a research strategist at the Mercatus Center at George Mason University. He served as a public trustee for Social Security and Medicare from 2010 through 2015. He wrote this for Tribune News Service.<\/em><\/p>\n

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Social Security and Medicare trusts will be depleted within the decade, but lawmakers must act now before it’s too late.<\/p>\n","protected":false},"author":1,"featured_media":694,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[57,9],"tags":[],"class_list":["post-6327","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-commentary","category-opinion"],"yoast_head":"\nCommentary: Social Security and Medicare\u2019s insolvency dates don\u2019t matter. 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