Both Medicare and Social Security are the financial pillars of retirees. However, they are currently facing shortfalls both in the short and long term. Medicare is funded by two different trust funds, Hospital insurance and Supplemental Medical Insurance Trust Funds ( U.S. Department of the Treasury , 2019). The trust funds are meant to supplement the taxes which are collected from workers. On the other hand, social security encompasses Disability Insurance (DI) and the Old Age and Survivors Insurance (OASI) Trust Funds (Singletary, 2019). Typically, the current collections from taxpayers cannot sustain the programs. The number of retired workers keeps rising due to earlier retirement and lengthier life spans, but there is no equivalent increase in the number of funders to Social Security to offset the costs (Milkovich, Newman & Gerhart, 2014). Also, there are other cost stimulants like liberal cost-of-living adjustments.
Possible Solutions
There are several solutions to the problems encountered by Medicare and Social Security. First, there is the need for increment in the payroll taxes paid to the Hospital insurance Fund for the support of Part A benefits. Moreover, there should be an increase in the income tax paid in the general fund for the support of part B, medical insurance, and part D benefits, prescription drugs. Besides, it is appropriate to increase the premium beneficiaries, as well as retirees, pay regarding part B and D benefits (Vernon, 2017). Furthermore, there should be an improvement in the delivery system of medical care and the health of beneficiaries and retirees. Finally, there should be increased deductibles as well as the co-payments paid by beneficiaries and retirees. For social security, it is prudent to remove the cap regarding earnings which are subject to FICA tax (Singletary, 2019). In this case, only those in a stable position will pay the tax exempting others.
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Barriers to the Solutions
The solutions to the problems encountered by Medicare and Social Security may face some obstacles. First, there is no specific mechanism to make follow-ups to ensure a proper lifestyle of retirees or beneficiaries for maintaining good health. Secondly, the increase in the premiums, deductibles, and co-payments from workers may face resistance. No one may be willing to welcome the steps because of the negative economic implications in the short run. Therefore, there is a need for adequate preparedness for workers before the implementation of the suggested solutions. Regarding social security, there may be adverse reactions from the rich who are in a position to pay the tax.
References
Milkovich, G., Newman, J., & Gerhart, B. (2014). Compensation (11th ed.). New York: McGraw-Hill/Irwin.
Singletary, M. (2019). In search of a simple fix for Social Security: Should Congress increase the full retirement age to 70? Retrieved from https://www.washingtonpost.com/business/2019/05/13/search-simple-fix-social-security/?noredirect=on
U.S. Department of the Treasury. (2019). Fact Sheet: 2019 Social Security and Medicare Trustees Reports. Press Releases . Retrieved from https://home.treasury.gov/news/press-releases/sm665
Vernon, S. (2017). Medicare funding: Problems and solutions. CBC news . Retrieved from https://www.cbsnews.com/news/medicare-funding-problems-and-solutions/
