1. Are Social Security and Medicare Solvent for the Future ?
Group 4
Day 2

2. CONTENTS Introduction of Social Security
History of Social Security and Medicare
Economy vs. Social Security and Medicare
Social Security Trust Funds solvency
Restoring solvency

3. Began in the 1930s.
Social Security provide benefit to retired, disable workers and their family, family members of deceased workers.

4. Social Security Act in 1935
Economic security for workers
Old Age Insurance: 65
Disability Insurance in 1956
Expansion of types of benificiaries
Increase in payroll taxes
Benefit levels increased periodically
Medicare
Attention on solvency since 1970s
1982: OASI borrow from DI and MHI (repaid in 1986)

5. Economy vs. Social Security
Is improve economy threaten social security?
What is the reason of develop economy?
If it can not increase human welfare, why to develop economy?

6. Social Security contain Medicare
In American pay out for medicare about 3,200 billion in 2015, which variant of GNP(gross nation product) 18%.
Reason :
over depend on market
For management , such as insurance company
Use high technology equipment

7. Cash Flow Deficits (non-interest income less costs)
Table. Projected Operations of the Social Security Trust Fund, ($ in billions)
Year
Non-Interest Income
Costs
Cash Flow Deficits (non-interest income less costs)
2014
783.4
863.1
(79.8)
2015
841.1
909.7
(68.3)
2016
888.8
963.3
(74.4)
2017
944.5
1,022.3
(77.8)
2018
1,003.4
1,087.6
(84.2)
2019
1,060.3
1,158.7
(98.4)
2020
1,117.1
1,235.2
(118.1)
Source:

8. Government save less money, cause bad financial
Government pay out for Social Security
Government save less money, cause bad financial
Economy and Social Security
negative relation
Economy develop slow down

9. Social Security and Medicare Trust Fund Solvency
Trust Fund solvency: if the trust funds are not able to pay all current expenses out of current tax income and accumulated trust fund assets, they are insolvent. Insolvency means funds are unable to pay full benefits on time
Near Insolvency: in early 1983, a solvency crisis almost happened in OASI Trusteed reports showed that the trust fund could be insolvent by July In a temporary manner, Congress allowed OASI borrowed from DI and MHI and shall repay fully in 1986.
Projection of the year of insolvency: in the 2014 report, DI will be exhausted in 2016 and OASI in In 2033, fund will be able to pay about 77% of scheduled benefits.

10. Restoring insolvency Decrease benefits Raising payroll taxes
Transfering funds