The latest estimates reflected the push and pull of many factors resulting from the pandemic, and the full impact may take years to resolve. The deep but relatively short recession reduced payroll tax revenue. But the death toll from COVID-19, concentrated among the elderly, has reduced future social security benefit payments. Hospitals have been stressed by the influx of COVID patients, but Medicare hasn’t had to pay as many for knee surgeries, colonoscopies and other more common procedures. Birth and immigration rates, which tend to support both programs, have both declined.
For Social Security, the loss of tax revenue on wages exceeded any savings on what the program would have paid to people whose lives were lost in the pandemic. The report notes that jobs, incomes, interest rates and economic growth fell in the second quarter of 2020 after the pandemic hit the United States.
“The finances of both programs have been significantly affected by the pandemic and the 2020 recession,” the administrators said. But “given the unprecedented level of uncertainty,” there was no consensus on the long-term effects of the pandemic. An imminent question for Medicare: Will the beneficiary population who survived the pandemic be healthier overall, or will a high number suffer from new conditions like the long COVID?
Social Security provides benefits to more than 65 million Americans, mostly retirees but also people with disabilities and survivors of deceased workers. Medicare covers over 60 million elderly and disabled people. Together, the two programs represent over 40% of the federal budget and act as stabilizers not only for families, but also for the national economy.