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Social Security disability fund projected to run dry in 2016

By STEPHEN OHLEMACHER and RICARDO ALONSO-ZALDIVAR
Associated Press

WASHINGTON (AP) - The 11 million people who receive Social Security disability face steep benefit cuts next year - unless Congress acts, the government said Wednesday.

The trustees that oversee Social Security said the disability trust fund will run out of money in late 2016, right in the middle of a presidential campaign. That would trigger an automatic 19 percent cut in benefits.

The average monthly benefit is $1,017.

The report said the fund faces "an urgent threat" that requires prompt action by Congress.

There is an easy fix available: Congress could shift tax revenue from Social Security's much larger retirement fund, as it has done in the past.

President Barack Obama supports the move, but Republicans say they want changes in the program to reduce fraud and to encourage disabled workers to re-enter the work force.

The trustees said the retirement fund has enough money to pay full benefits until 2035, a year later than last year's report. At that point, Social Security will collect enough in payroll taxes to pay about 75 percent of benefits.

If the retirement and disability funds were combined, they would have enough money to pay full benefits until 2034, the trustees said.

Advocates for seniors say that gives Congress plenty of time to address Social Security's long-term problems, without cutting benefits. But some in Congress note that the longer lawmakers wait, the harder it gets to address the shortfall without making significant changes.

Medicare's giant hospital trust fund is projected to be exhausted in 2030. At that point, Medicare taxes would be enough to pay 86 percent of benefits.

Medicare is adding 10,000 new beneficiaries a day as baby boomers reach age 65. But so far the demographic shift has not overwhelmed the program with costs because, for the most part, boomers are healthier than the older generations of Medicare beneficiaries. That has a positive impact on the bottom line, helping to hold down per-beneficiary costs.

Nonetheless, the Obama administration is in the midst of overhauling the way Medicare pays doctors and hospitals to emphasize quality results over the sheer volume of procedures, tests, and services.

The Department of Health and Human Services has set a goal of tying 30 percent of payments under traditional Medicare to new models of care by the end of 2016, and an increasing share thereafter. Among the initiatives is a proposal to change the way hospitals are paid for hip and knee replacement surgery.

The Medicare and Social Security trustees are the secretaries of the Treasury, Health and Human Services, and Labor departments, as well as the Social Security commissioner and two public trustees - a Democrat and a Republican.

Nearly 60 million people receive Social Security benefits, including 42 million retired workers and dependents, 11 million disabled workers and 6 million survivors of deceased workers.

About 55 million retirees and disabled people get Medicare. The hospital trust fund is only part of the program. Coverage for outpatient care and prescription drugs is covered by premiums and other government spending.

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Follow Stephen Ohlemacher on Twitter: http://twitter.com/stephenatap

Copyright 2015 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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