Social Security and Medicare Trust Funds and the Federal Budget: An Expanded Exposition

摘要

Social Security and Medicare provide cash and in-kind benefits to nearly forty million people each year. These social insurance programs are financed largely through payroll contributions, income taxes on benefits received, premiums, and federal general fund revenues that flow into federal trust funds for each program. The current and future financial status of the separate trust funds is the focus of the annual reports of the Medicare and Social Security Boards of Trustees, a focus necessitated by law that may appropriately be referred to as the 'trust fund perspective.' The latest reports show that while in the near term the trust funds are in surplus, in the long run the funds will have substantial deficits due to impending demographic shifts and projected growth in per capita health care costs. This paper attempts to elucidate the distinctions between the trust fund and budget perspectives.