Chairman Price Opening Statement: Restoring the Trust for Americans At or Near Retirement
As prepared for delivery
Today’s hearing is the third in a series of hearings begun last summer when this committee embarked on a new initiative called Restoring the Trust for All Generations. This is an effort to raise awareness about the fiscal and policy challenges inherent in America’s health, retirement, and economic security programs. By focusing attention on these matters, we aim to build a broad consensus among our colleagues and the country at large around the need to do something to save and strengthen programs like Medicare and Social Security so today’s beneficiaries and tomorrow’s retirees have programs they can count on.
Both Medicare and Social Security face real, substantial financial challenges. According to the most recent report from the Medicare and Social Security Trustees, Medicare's hospital insurance trust fund is expected to be insolvent in 2028 – two years earlier than previously estimated. Social Security will exhaust its reserves in 2034. This is not simply an accounting challenge. With insolvency, Medicare will be able to cover only 87 percent of expected health care costs for beneficiaries, and Social Security recipients will face an immediate 21 percent reduction in benefits. Clearly, doing nothing is not an option.
With 10,000 baby boomers reaching retirement age each day, the number of workers paying into Medicare and Social Security is inadequate to ensure the long-term solvency of these programs, as they exist now. In 1950, the Social Security program was supported by 16.5 workers for every retiree; that number is now 2.8 workers per retiree. We can lament this fact, but we cannot deny it. The demographic and fiscal dynamics at play in both of these programs are a ticking time bomb counting down to when the promise made to seniors will no longer be kept. Surely no one believes that is an acceptable scenario.
Unfortunately, the financial well-being of the programs is just one challenge we face. If Medicare and Social Security were on solid financial footing – which they clearly are not – the programs would still be suffering from an antiquated and flawed design. In short, recipients are not getting the highest level of benefit and services they could get under a reformed system.
Medicare’s current structure is awkward and cumbersome. You have to sign up for three separate programs in order obtain essentially the same level of coverage you would get in the private insurance market. Even then, a number of Medicare enrollees feel obligated to purchase additional insurance to cover gaps in what Medicare is able to offer.
Meanwhile Social Security has not kept pace with an evolving economy and society. The program encourages early retirement even though people are now both working and living much longer than when the program first started.
As with so many of the challenges facing our nation today, the ultimate success of any reform effort lies, partially, with the health of our economy. But stronger economic growth is no panacea. It will not improve the structure of these programs or ultimately ensure their sustainability. It certainly will not make the programs more reflective of the needs of our senior citizens.
With our Restoring the Trust initiative we do not seek to dictate specific solutions. Rather, we aim to raise awareness and promote important principles that ought to be a part of any effort to save, strengthen, and secure vital programs like Medicare and Social Security. By focusing on the need for better choices, greater competition among those providing services to beneficiaries, and innovation across the board, we can ensure health and retirement security for the American people.
To help us discuss how best to achieve that goal, we are joined this morning by Jason Fichtner, Senior Research Fellow at the Mercatus Center at George Mason University; Daniel Weber, Founder of the Association of Mature American Citizens; Scott Gottlieb, Resident Fellow at the American Enterprise Institute; and Monique Morrissey, an economist at the Economic Policy Institute.
Thank you all for being here. I look forward to a constructive discussion. This issue could not be more important to individual Americans and our country as a whole.And with that, I yield to the Ranking Member, Mr. Yarmuth