Event Recap: Checking in on the 2025 Social Security & Medicare Trust Funds
On June 24, the Committee for a Responsible Federal Budget hosted a virtual event following the release of the 2025 Social Security and Medicare Trustees' reports, which evaluate the fiscal health of the programs over the next 75 years.
The event featured opening remarks from Marc Goldwein, the Committee’s Senior Vice President and Senior Policy Director, and was followed by a panel discussion with experts including Karen Glenn, Chief Actuary of the Social Security Administration; Mark Sarney, the Committee’s Director of Social Security Policy; and Anna Bonelli, the Committee’s Director of Health Policy.
A video of the full event is available here or below. You can also view the slide deck used in the presentation here.
Goldwein started the conversation by reviewing the key findings of the latest Trustees’ reports. He noted that the theoretically combined Social Security Old-Age and Survivors Insurance and Disability Insurance (OASDI) trust funds are projected to be insolvent in 2034, one year sooner than projected in last year’s report. Separately, the Old-Age and Survivors Insurance (OASI) trust fund is expected to deplete its reserves by 2033. On the Medicare side, the Hospital Insurance (HI) trust fund is now forecast to exhaust its reserves in 2033, three years sooner than projected in last year’s report. Goldwein emphasized that the message remains clear – the shortfalls facing Social Security and Medicare trust funds are growing.
Glenn provided an overview of Social Security’s financial outlook from the Trustees’ report. She explained the factors driving the sooner-than-expected depletion date: a lower share of labor wages in economic output, a slower-than-hoped rebound in fertility rates, and the Social Security Fairness Act, which repealed the Windfall Elimination Provision and the Government Pension Offset, and increased Social Security’s costs. Bonelli discussed the findings of the Medicare Trustees’ report and the challenges facing Medicare’s HI trust fund. In 2033, absent Congressional action, the program would only be able to pay 89 percent of its obligations, resulting in an abrupt 11 percent reduction in payments to plans, hospitals, and other Part A providers.
Bonelli noted that this deterioration in Medicare’s outlook was driven in part by higher-than-anticipated health care spending, such as rising hospital costs. She also emphasized that Medicare’s overall costs continue to rise rapidly as the population ages and health care prices increase. Total Medicare spending is expected to increase from 3.9 percent of Gross Domestic Product (GDP) today to over 6.2 percent by 2050, underscoring the program’s growing fiscal pressure. Bonelli also highlighted various options for Medicare savings that curb spending and extend the solvency of the Medicare trust fund. Practical, bipartisan policy changes could result in significant savings over time. For example, Medicare Advantage plans are significantly overpaid compared to traditional Medicare and could be scaled back. Another option with bipartisan support is implementing site-neutral payment policies that pay the same amount for the same services, regardless of where the care is provided.
Sarney stressed the urgency of acting sooner rather than later to shore up the trust funds and described what could happen if lawmakers fail to act. He noted that 2033 is shaping up to be a critical year with the depletion of both the HI and the Social Security’s OASI trust fund. If the OASI trust fund reaches insolvency in 2033, beneficiaries could face across-the-board benefit reductions, and a typical couple retiring that year could see an annual benefit reduction of around $17,800. Sarney also discussed how Social Security’s outlook has worsened compared to last year and the past decade, including legislative actions such as the Social Security Fairness Act and economic changes like lower fertility rates, a higher share of compensation above taxable payroll, and longer life expectancies. These factors have roughly doubled the size of the long-range shortfall since 2010.
Although the outlook for the Social Security and Medicare trust funds may seem grim, Bonelli and Sarney emphasized that a range of solutions exists and the worst-case scenarios are entirely avoidable if Congress acts promptly. Early, gradual reforms would spread out the impact, give workers and retirees time to adjust, better shield current beneficiaries, and restore public confidence in both programs.
The Committee for a Responsible Federal Budget would like to thank all those who participated in and attended the event.
