Policy Backgrounders

Developments in Social Security and Medicare for 2023

October 20, 2022

The year 2023, expected to be rife with economic disruption, will bring two new developments to the largest US retirement programs, Social Security and Medicare, negatively affecting the sustainability of these two central programs even further and challenging the nation’s fiscal health. Reform of these two critical programs, to ensure solvency and to address the fiscal debt and deficit issues, have been a longstanding concern of CED. These changes, as explained below, make reform even more urgent.  

On October 13, Social Security beneficiaries learned that their benefits will increase 8.7 percent through an automatic adjustment for inflation. Meanwhile, Medicare premiums, which are often deducted directly from Social Security payments, will decrease for many seniors. These two changes will work in tandem to increase immediate cash flow to seniors, but they will also result in serious challenges for the federal government. Tracking with the historic levels of inflation, the social security cost of living increase will be the largest in four decades, further challenging the viability of the depleting social security trust fund, estimated to be able to pay full benefits only until 2034.

Regarding the Medicare premium deductions, they are possible because for the first time CMS had denied coverage for an entire class of drugs, effectively closing the door to reimbursement for a class of drugs, which has shown promise in slowing the progression of Mild Cognitive Impairment (MCI) and early Alzheimer’s. Alzheimer’s is expected to affect up to 12.7 million Americans by 2050, which shows both the risks to Medicare from paying for treatments and the dangers if effective treatments for Alzheimer’s are not pursued.