Another commonly used measure of Social Security’s sustainability is the trust funds’ dates of exhaustion. CBO projects that under current law, the DI trust fund would be exhausted in fiscal year 2026 and the OASI trust fund would be exhausted in calendar year 2031. If their balances were combined, the OASDI trust funds would be exhausted in calendar year 2031, CBO estimates. The total reduction in annual benefits necessary for the trust funds’ outlays to match their revenues in each year after the OASDI trust funds were exhausted would be about 25 percent in 2032 and would rise to about 31 percent in 2050, in CBO’s estimation.
Major Health Care Programs. Outlays for the major health care programs consist of spending for Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP), as well as outlays for premium tax credits and related spending.26 Spending on Medicare, which provides health insurance to about 62 million people (most of whom are at least 65 years old), accounts for about three-fifths of that spending.
For 2020 through 2030, CBO projects federal spending for the government’s major health care programs under the assumption that the laws governing those programs will, in general, remain unchanged. CBO assumes that Medicare will pay benefits as scheduled under current law (the same assumption it makes for Social Security), regardless of the amounts in the program’s trust funds. For projections beyond 2030, CBO uses a formulaic approach that combines estimates of the number of expected beneficiaries of the government’s health care programs with mechanical estimates of the growth in spending per beneficiary. (CBO chose that approach to address the considerable uncertainty that surrounds the evolution of health care delivery and financing systems.)
Over the past five decades, spending for the major health care programs has grown faster than the economy, and that trend persists in CBO’s extended baseline. In 2020, net federal spending for the major health care programs is estimated to equal 6.1 percent of GDP. If current laws generally remained in place, net outlays for those programs would increase to 9.2 percent in 2050: Medicare spending, net of offsetting receipts (mostly premiums paid by enrollees), would grow by 2.5 percent of GDP, and spending on Medicaid and CHIP, combined with outlays for premium tax credits and related spending, would grow by 0.6 percent of GDP (see Figure 10).27