Press Release Affordable Care Act Health and Social Programs United States

Important Factors Made Modest Improvements to Social Security and Medicare Finances

June 07, 2022

Contact: KL Conner, 202-281-4159Mail_Outline

Washington — A new analysis, released today by the Center for Economic and Policy Research (CEPR), examines the main factors that contributed to modest improvements in the finances of Social Security and Medicare. 

In an analysis of the recent 2022 reports from the Board of Trustees for Social Security and Medicare, CEPR senior economist Dean Baker explains that Medicare’s finances benefited from the Affordable Care Act (ACA).

“This is hugely important, and little appreciated,” said Baker. The reduced payments to private plans operating within the Medicare program are attributed to the Affordable Care Act (ACA) reining in health care cost growth. 

The analysis finds that the projected Medicare savings from the ACA is almost as large as the current projected shortfall for the Social Security program.

Two factors improved Social Security’s outlook: The rapid recovery from the pandemic recession and reduced rates of disability. The projected shortfall over the program’s 75-year planning period fell from 3.54 percentage points of payroll to 3.42 percentage points of payroll. 

Reduced rates of disability were a factor in lowering Social Security’s projected shortfalls. But there may be a hidden human cost if disabled people are too discouraged to apply or are being denied benefits.

It may be surprising to find that Medicare’s finances got a boost from reduced costs in the same year that sharp increases in Medicare premiums made headlines. Baker explains, “The Medicare premium hike in 2022 shows the problem of out of control drug costs, which the ACA addressed in other areas. Fortunately, the Biden administration is looking to fix the problem with drugs as well.”



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