Social Security and Medicare are the country’s two largest and most important social programs, which is why the release of the annual trustees’ reports usually get considerable attention. These are effectively report cards on the financial health of these two programs.
The release of these reports last week actually got relatively little attention, in part because of competition from other big news items, and in part because there was little change from the reports issued last year. However, at least in the case of the Medicare trustees report, the fact that there were no major changes should have been big news.
The reason that a 2017 Medicare trustees report showing pretty much the same financial picture as the 2016 Medicare trustees report (the projected shortfall is actually slightly lower in this year’s report) is newsworthy is that it’s a different group of trustees.Four of the six trustees signing the report in 2016 were political appointees of President Obama. Four of the six trustees signing the 2017 report are political appointees of President Trump. In effect, the Trump trustees indicated that they have the same view of Medicare’s finances as Obama trustees. And, this is a view that believes the program’s finances hugely improved as a result of the passage of the Affordable Care Act (ACA).
The 2009 trustees report issued shortly after President Obama came into office projected that Medicare faced a shortfall equal to 1.7 percent of GDP over its 75-year planning horizon. This was almost two and a half times the size of the shortfall projected for Social Security at the time.
The 2010 trustees report reduced this projected shortfall by more than 80 percent, showing that the funding gap over the 75-year planning horizon was just 0.3 percent of gross domestic product. The trustees explicitly attributed the lower projected shortfall to cost controls that were put in place as part of the ACA.
At the time, many Republicans and opponents of the ACA expressed skepticism about this lower projected shortfall, arguing that Obama’s trustees were just engaged in wishful thinking or even outright lying. The next six trustees report showed small changes up and down, but continued to assume the large reduction in spending as the 2010 report.
However, these projections could all be called into question since Obama appointed trustees continued to dominate the process. If their motives were suspect, then the projected savings from the ACA could be called into question.
With the 2017 trustees report, we have President Trump’s trustees indicating that they accept that the ACA will lead to the savings expected by the Obama-era trustees. This is no longer an issue for partisan support, experts from both parties now accept that the ACA led to a sharp reduction in the long-term cost of the Medicare program.
And these savings are large. Republicans looking to privatize Social Security constantly harp on the “massive” shortfall projected for the program over its 75-year planning horizon. Since the projected Medicare savings due to the ACA are far larger than the projected Social Security shortfall, then it stands to reason these savings must also be a very big deal. If the Social Security shortfall is supposed to scare us, then the ACA savings to Medicare should be cause for serious celebration.
This is a good point to keep in mind as the Republicans try to dismantle Obamacare. The ACA not only extended insurance coverage to tens of millions of people who were previously uninsured, it also slowed the rate of health care cost growth in the economy. It seems that even Trump’s Medicare trustees now agree with this assessment.