If Social Security isn’t fixed, average Ohioan will lose $487 a month, report estimates

Huge numbers of Ohio seniors will likely be driven into poverty if Congress doesn’t do something to fix Social Security and Medicare, advocates say.

The Social Security and Medicare Board of Trustees last Tuesday issued a report saying that both programs will be insolvent in less than a decade.

That doesn’t mean the programs will shut down altogether, but it does mean a big cut in benefits. The nonpartisan Committee for a Responsible Federal Budget estimates that more than 2 million Ohioans will lose an average of $487 a month, and cost the state $12.1 billion starting in 2032.

Medicare Part A, the program that covers hospital and nursing-home care, is projected to be insolvent by 2033.

If that happens, it will cut the amount going for care by 11% as more Ohioans get older and sicker, the committee estimates. This in a time when already-stressed rural and inner-city hospitals are losing billions due to Medicaid cuts, according to an analysis by the Commonwealth Fund

Ohio is among the states that are more vulnerable to a shortfall. It has the 20th-largest population over 65, and the 18th-largest between 55 and 64, according to KFF.

And AARP Ohio reports that the program keeps more than 700,000 Ohio seniors out of poverty.

The time to act is now, said AARP Ohio Director Jenny Carlson.

“The trustee report puts Congress on the clock,” Carlson said in an interview.

“We’ve got 2.5 million Ohioans receiving Social Security. We will continue to be fierce defenders of Social Security. We worked. We paid in. We earned these benefits. So Congress needs to act now to protect the full benefit and strengthen Social Security.”

Carlson said she’s particularly concerned about low-income seniors. The average Social Security recipient in Ohio gets about $1,900 a month — or $23,000 a year — in benefits.

“For many Ohioans, that covers basic necessities,” she said. “Think about groceries, housing, utilities, prescriptions and healthcare costs.”

If their Social Security is slashed, state and local governments will be left to deal with the consequences, Carlson said.

“The risk is if you kick the can down the road — if benefits are reduced — that impacts basic necessities and it’s going to put more pressures on state budgets because people can become (Medicaid and Medicare) eligible. And eligible for food stamps,” she said.

“It also puts pressure on social services provided at the county level.”

Experts blamed the shortfall on several factors, including an aging population and decades of tax cuts and other policies that have accelerated income inequality. But they were most critical of congressional inaction.

The Social Security “Trust Fund is under strain because Congress has failed to update the program for the economy we actually have,” Elizabeth Wilkins, president and CEO of the Roosevelt Institute, said in a written statement.

“Too much income now flows to the top, where it escapes Social Security taxation. Too many workers have faced weak wage growth. And the government’s poor response to the Great Recession damaged workforce participation and wages, and, in turn, weakened the reserve.”

Wilkins was referring in part to the fact that wage earners pay a 6.2% Social Security tax only on their first $184,000 of income. That tax is matched by employers.

For its part, Medicare is taxed at an employer-matched 1.45% that has no income cutoff.

There is already less in dedicated revenue for Social Security retirement than there are scheduled benefits.

By 2032, “the fund’s reserves will become depleted and continuing program income will be sufficient to pay 78 percent of total scheduled benefits,” the Social Security trustees said last Tuesday in a written statement.

The Medicare Hospitalization Insurance fund is also falling short. If it isn’t shored up, it will require an 11% cut in 2033, and that will grow to a 16% cut by 2040, the Committee for a Responsible Federal Budget said.

When Social Security and Medicare faced insolvency in 1981, Congress passed bridge funding and created a commission to come up with a longer-term solution.

In 1983, Congress made amendments to the Social Security Act that were supposed to shore up the system for 75 years.

However, they didn’t perfectly predict the future — including how quickly inequality would grow.

In the years since, experts say, Congress has failed to address the problem.

“Instead of talking about solutions to these real funding problems, leaders in Washington instead demagogue each other over the issue, with both sides promising not to touch the programs,” the Committee for a Responsible Federal Budget said in a written statement.

“Unfortunately, that promise is a tacit endorsement of the across-the-board cuts that will happen at exhaustion — an unacceptable outcome. No state would be spared from the consequences of failure to save these programs from insolvency — each and every member of the House and Senate has constituents that rely on the programs.”

The committee added that the Republican spending bill passed last summer only added to the problem.

It cut taxes for the richest 1% of Americans by about $1 trillion over 10 years while cutting a similar amount from health and nutrition programs for the poor — making inequality even worse.

“… thanks mainly to the tax cuts in the ‘One Big Beautiful Bill’ and worsening demographics, Social Security’s projected shortfall is a full 16% worse than last year’s,” the budget watchdog said. “Medicare’s shortfall is 33% worse.”

The staff of Ohio Republican U.S. Sen. Jon Husted, who voted for the bill, didn’t respond to questions for this story.

Husted’s Democratic challenger accused Husted of trying to make the Social Security shortfall even worse by proposing a balanced-budget amendment.

In announcing the amendment, Husted chided Congress for a “lack of discipline,” but he didn’t say Social Security and Medicaid would have to be cut to balance the budget.

A spokeswoman for former Ohio Democratic U.S. Sen. Sherrod Brown blasted the proposal and other of Husted’s votes.

“Rather than focus on lowering costs for Ohio families, Jon Husted ended his first year in the Senate by proposing a plan that would cut back Social Security and Medicare,” the spokeswoman, Lauren Chou, said in an email.

“Husted has already voted nine times to raise health care costs and kick nearly half a million Ohioans off their coverage — all to give billionaires the largest tax cut in American history. Sherrod Brown fought to restore Social Security benefits to a quarter million Ohio workers and will continue to stand with hardworking Ohioans.”

Congress will likely face intense pressure to find a fix.

One idea is to remove the income cap beyond which wealthy Americans stop paying into the system. But experts say that’s too little, too late.

“Congress waited too long for any one policy to solve this problem neatly,” Stephen Nuñez, the Roosevelt Institute’s director for stratification economics, said in an email. “If policymakers had acted 10 or 20 years ago, lifting the cap would have gone much further.”

Nuñez added, “Instead, runaway income inequality and economic mismanagement further eroded the program’s foundation. That’s why we need a multifaceted approach going forward. One that demands more from the wealthiest, closes loopholes that allow income to escape tax, and protects and expands benefits.”

The Committee for a Responsible Federal Budget lists several possible approaches:

Six-figure limit — Capping annual benefits for the wealthiest retirees at the normal retirement age (67 for people born in 1960) at $100,000 for couples and $50,000 for individuals. It’s estimated to close 20% of the solvency gap if the cap is indexed to inflation.

COLA cap — Capping cost-of-living adjustments and indexing them to a measure of inflation known as “chained CPI.” This is estimated to close 10% of the solvency gap if applied to the top quarter of recipients.

Employer compensation tax — Replacing employer Social Security and Medicare contributions with a flat tax on all compensation — including massive CEO pay and their gold-plated benefits. That measure is estimated to close a whopping 66% of the Social Security shortfall and half of the Medicare gap.

With 38 million members nationally who are known for their tendency to vote, AARP is one of the most powerful lobbying organizations in the United States.

Carlson, the organization’s Ohio director, said it will press lawmakers to make sure Social Security and Medicare keep faith with the people paying into them.

“Advocacy is our backbone,” she said. “Consumers across the state and the nation need to know they have a strong voice in Congress and the states saying we will defend the solvency of Social Security and Medicare. We have been for 60 years.”