Summary of the 2000 Annual Social Security and Medicare Trust Fund Reports
This document is a summary of the 2000 Annual Reports. The reports describe the funds' current and projected financial condition, within the next 10 years (the short term) and over the next 75 years (the long term).
A Message to the Public
Each year we, the Trustees of the Social Security and Medicare Trust Funds, report in detail on their financial condition. The reports describe the funds' current and projected financial condition, within the next 10 years (the "short term") and over the next 75 years (the "long term"). This document is a summary of the 2000 Annual Reports.
The most important new information in this year's reports is that 1999 was a third consecutive year of substantial improvement in the financial status of the Medicare Hospital Insurance (HI) Trust Fund, which pays inpatient hospital expenses. The HI fund is now projected to be able to pay benefits until 2025, 10 years longer than projected in last year's report and 24 years longer than projected in the 1997 report. The projected long-term shortfall in the HI fund also has declined and is now 1.21 percent of taxable payroll, only 28 percent as large as projected in 1997. This improvement has occurred because income to the fund has exceeded expectations due to robust economic growth and expenditures have declined as a result of changes made by the Balanced Budget Act of 1997, slow increases in health care costs generally, and continuing efforts to combat fraud and abuse. Although this substantial improvement eases the urgency for immediate action, the longterm solvency ofthe HI program will require additional reforms and periodic review.
The Supplementary Medical Insurance (SMI) Trust Fund, which pays doctor's bills and other outpatient expenses, is expected to remain adequately financed into the indefinite future, but only because current law sets financing each year to meet the next year's expected costs. Although the rate of growth of SMI costs has moderated in recent years, outlays have still increased 38 percent over the past 5 years, or about 5 percent faster than the economy as a whole. As with HI, efforts on a recurring basis will be necessary to slow growth in SMI costs. Despite the significant improvement in the financial outlook for Medicare, the projected increases in medical care costs still make finding solutions to Medicare's financing problems more difficult than for Social Security.
The Social Security trust funds are now projected to be adequately financed 3 years longer than in last year's report, or until 2037. At that time, annual tax income to the combined trust funds is projected to equal about 72 percent of the cost of benefits payable. Individually, the Old-Age and Survivors Insurance (OASI) Trust Fund, which pays retirement and survivors benefits, is projected to be able to pay full benefits on time until 2039. The Disability Insurance (DI) Trust Fund, which pays disability benefits, is projected to be able to pay full benefits until 2023. Also, the longterm projected shortfall in the combined trust funds has decreased to 1.89 percent of taxable payroll, the lowest deficit since the
1993 report. The improvement this year in these measures, despite increases in projected life expectancy, can be attributed largely to better actual and projected economic performance and advances in projection methods.
The longer run financing of both Social Security and Medicare needs to be addressed in a timely way to allow for phasing in any necessary changes and for workers to adjust their plans to take account of those changes. With informed public discussion and timely legislative action, Social Security and Medicare will continue to play their critical role in the lives of virtually all Americans.
Summary of the 2000 Annual Reports The Board of Trustees
There are six Trustees: the Secretary of the Treasury, the Secretary of Labor, the Secretary of Health and Human Services, the Commissioner of Social Security, and two members appointed by the President and confirmed by the Senate to represent the public. …