“Social Security Is Staring at Its First Real Shortfall in Decades,” by Jeff Sommer, New York Times
“A slow-moving crisis is approaching for Social Security, threatening to undermine a central pillar in the retirement of tens of millions of Americans. Next year, for the first time since 1982, the program must start drawing down its assets in order to pay retirees all of the benefits they have been promised, according to the latest government projections. Unless a political solution is reached, Social Security’s so-called trust funds are expected to be depleted within about 15 years. Then, something that has been unimaginable for decades would be required under current law: Benefit checks for retirees would be cut by about 20 percent across the board.”
LTC Comment (from Stephen A. Moses, President, Center for Long-Term Care Reform):
When the Grey Lady finally takes notice of the entitlement crisis, it is hopeful news. But the problem is far worse than portrayed in this article. Worse than the fact that the Social Security trust fund runs out in 15 years is that, in the meantime, it will be drawing down $2.6 trillion from general funds that the rest of the government has already borrowed and spent and will have to tax or borrow to replenish in order to repay Social Security. A far less well known problem is that when Social Security benefits fall by 20 percent, Medicaid long-term care providers will be devastated. They receive a substantial portion of their revenue, upwards of 13 percent, from the contribution of Social Security benefits to offset recipients’ cost of care. Cutting that by one-fifth will be very damaging to nursing home and home care providers that are already barely managing with Medicaid reimbursements less than the cost of the care.