oversight

Social Security and Medicare: Improved Schedule Management Needed for More Timely Trust Fund Reports

Published by the Government Accountability Office on 2019-08-14.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

             United States Government Accountability Office
             Report to the Ranking Member,
             Subcommittee on Social Security,
             Committee on Ways and Means,
             House of Representatives


             SOCIAL SECURITY
July 2019




             AND MEDICARE

             Improved Schedule
             Management Needed
             for More Timely Trust
             Fund Reports




GAO-19-596
                                               July 2019

                                               SOCIAL SECURITY AND MEDICARE
                                               Improved Schedule Management Needed for More
                                               Timely Trust Fund Reports
Highlights of GAO-19-596, a report to the
Ranking Member, Subcommittee on Social
Security, Committee on Ways and Means,
House of Representatives




Why GAO Did This Study                         What GAO Found
The Social Security Act requires               Annual reports on the status of Social Security and Medicare trust funds are
boards of trustees to issue reports to         developed through a collaboration between agency officials and trustees, which
Congress by April 1 each year on the           include relevant Cabinet members and public members nominated by the
financial status of the Social Security        President (if confirmed). Offices of the Chief Actuaries from the Social Security
and Medicare trust funds.                      Administration (SSA) and the Centers for Medicare & Medicaid Services (CMS)
Policymakers and others can use                submit data and draft reports to a working group of agency officials representing
these reports to understand the                trustees and any public trustees. The working group reviews the information and,
programs’ finances, conduct oversight,         after gaining consensus, submits it to the boards of trustees for final approval.
and consider legislative proposals for
                                               The boards of trustees send the final reports to Congress.
the programs. GAO was asked to
review the timeliness of these reports.        The trustees missed the April 1 statutory deadline for submitting the reports to
                                               Congress in 17 of the 25 years from 1995 to 2019, and have issued them more
This report (1) describes how the              than 2 months late in 6 of the last 10 years (see figure). According to agency
boards of trustees develop the annual          officials and former public trustees GAO interviewed, factors that may account
Trustees reports, and (2) examines the         for delays include late-breaking changes to assumptions or data, and difficulty
extent to which the boards of trustees         scheduling the boards’ meetings. Additionally, contrary to GAO’s guide on best
have provided the reports to Congress          practices for project schedules, officials have not taken steps to update the
by the April 1 deadline since 1995, and        report-development schedules to reflect actual progress, maintained a formally
what factors account for any delays.
                                               documented baseline schedule to incorporate lessons learned from prior years,
GAO reviewed boards of trustees                or notified Congress of their progress. Without taking steps to improve report-
meeting minutes from 1995-2018,                development schedule management, these trust fund reports will likely continue
working group agendas from 2011-               to be untimely, missing the April 1 statutory deadline. Also, without improved
2018, and report development                   efforts to keep congressional committees informed, Congress will be unaware of
schedules and the annual Trustees              when the reports will be issued, potentially hindering oversight of the trust funds.
reports from 1995-2019; as well as
relevant federal law. GAO also                 Timeliness of Required Reports on the Social Security and Medicare Trust Funds (1995-2019)
interviewed agency working group
officials from SSA and CMS; the
Departments of Health and Human
Services, Labor, and the Treasury; and
eight former public trustees who
served since 1995.

What GAO Recommends
GAO recommends that Treasury take
steps to work with the other trustees to
improve schedule management for
developing the annual Trustees
reports, and to establish a policy to
inform congressional committees of
jurisdiction about expected delays in
issuing the reports. Treasury agreed
with the recommendations.


View GAO-19-596. For more information,
contact Elizabeth Curda at (202) 512-7215 or
curdae@gao.gov or James Cosgrove at (202)
512-7114 or cosgrovej@gao.gov.
                                                                                           United States Government Accountability Office
Contents


Letter                                                                                     1
               Background                                                                  3
               Agency Officials and Trustees Follow a Collaborative Process
                 Each Year to Develop the Trustees Reports                                 4
               The Boards Have Frequently Missed the Statutory Deadline and
                 Have Not Effectively Managed the Report-Development
                 Schedule                                                                 12
               Conclusions                                                                18
               Recommendations for Executive Action                                       18
               Agency Comments and Our Evaluation                                         19

Appendix I     Assumptions Discussed in the 2019 Social
               Security and Medicare Trust Fund Reports                                   21



Appendix II    Comments from the Department of the Treasury                               22



Appendix III   Comments from the Social Security Administration                           23



Appendix IV    GAO Contacts and Staff Acknowledgments                                     24


Tables
               Table 1: Initial Trustees Report Development Schedules Did Not
                       Significantly Change From 2014-2019                                17
               Table 2: Assumptions Discussed in the 2019 Social Security and
                       Medicare Trust Fund Reports                                        21

Figures
               Figure 1: Annual Cycle for Developing the Trustees Reports                  6
               Figure 2: Timeliness of Required Reports on the Social Security
                        and Medicare Trust Funds (1995-2019)                              13




               Page i                                  GAO-19-596 Social Security and Medicare
Abbreviations

CMS               Centers for Medicare & Medicaid Services
DI                Disability Insurance
DOL               Department of Labor
HI                Hospital Insurance
HHS               Department of Health and Human Services
OACT              Office of the Actuary
OASDI             Old-Age, Survivors, and Disability Insurance
OASI              Old-Age and Survivors Insurance
OCACT             Office of the Chief Actuary
PPACA             Patient Protection and Affordable Care Act
SMI               Supplementary Medical Insurance
SSA               Social Security Administration
SSAB              Social Security Advisory Board
Treasury          Department of the Treasury




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Page ii                                           GAO-19-596 Social Security and Medicare
                       Letter




441 G St. N.W.
Washington, DC 20548




                       July 30, 2019

                       The Honorable Tom Reed
                       Ranking Member
                       Subcommittee on Social Security
                       Committee on Ways and Means
                       U.S. House of Representatives

                       Dear Mr. Reed:

                       The Social Security and Medicare programs receive funding from trust
                       funds that generally receive payroll taxes from current workers and
                       employers, among other sources, and pay out benefits to current
                       beneficiaries. 1 Most Americans have a stake in the financial condition of
                       the trust funds. At the end of 2018, approximately 176 million people
                       contributed to the Social Security and Medicare trust funds through
                       payroll taxes, about 63 million people received Social Security benefit
                       payments, and about 60 million people were covered by Medicare.
                       Information on the financial condition of the trust funds can be used by
                       policymakers, agencies, researchers, and the public to understand the
                       programs’ finances and evaluate any policy changes to the programs.

                       Boards of trustees manage the Social Security and Medicare trust funds
                       and report annually to Congress on their financial status, under the Social
                       Security Act, which requires the boards of trustees to provide the reports

                       1
                         For the purposes of this report, we refer to both the Old-Age and Survivors Insurance
                       (OASI) and Disability Insurance (DI) programs together as “Social Security,” and both the
                       Hospital Insurance (HI) and Supplementary Medical Insurance (SMI) programs together
                       as “Medicare.” Social Security is financed through the OASI Trust Fund, which pays
                       retirement benefits, and the DI Trust Fund, which pays disability benefits. These trust
                       funds receive funding from payroll taxes, taxes on Old Age, Survivors, and Disability
                       Insurance (OASDI) benefits, and interest earnings. Medicare is largely financed through
                       two trust funds: the HI Trust Fund, and the SMI Trust Fund. The HI Trust Fund pays for
                       inpatient hospital services, home health services following hospital stays, services
                       provided in skilled nursing facilities, and hospice care for the aged and disabled, and it
                       receives funding from payroll taxes, taxes on OASDI benefits, interest earnings, and other
                       sources. The SMI Trust Fund pays for physician care, outpatient hospital care, home
                       health care, and other services for the aged and disabled who have voluntarily enrolled,
                       and subsidizes access to drug insurance coverage on a voluntary basis for all
                       beneficiaries, as well as premium and cost-sharing subsidies for low-income enrollees. It
                       receives funding from general revenues, beneficiary premiums, transfers from states,
                       interest earnings, and other sources. These lists are not exhaustive of the coverage
                       provided through these programs.




                       Page 1                                            GAO-19-596 Social Security and Medicare
(Trustees reports) to Congress each year by April 1. 2 The boards have six
trustees: four from federal agencies and two who are members of the
public, when confirmed. The boards issue one report on Social Security
and one on Medicare.

Given the importance of these programs and the responsibility of
Congress to oversee them, you asked us to review the timeliness of the
reports. This report (1) describes how the boards develop the annual
Social Security and Medicare Trustees reports, and (2) examines the
extent to which the boards have provided the Trustees reports to
Congress by the April 1 deadline since 1995, and what factors account for
any delays.

To determine how the boards developed the Trustees reports, we
examined documentation from the boards and their working group,
interviewed agency officials and former public trustees, and reviewed
relevant federal law and the boards’ bylaws. Since the current bylaws for
the boards were adopted in 1995, we reviewed documentation from 1995-
2018. Documentation included the meeting minutes of the boards from
1995-2018, and meeting agendas of the boards’ working group from
2011-2018. 3 Additionally, we spoke with officials involved in developing or
reviewing the reports since 1995. We interviewed officials from the
agencies represented on the boards: the Departments of Health and
Human Services (HHS), Labor (DOL), and the Treasury (Treasury), as
well as the Social Security Administration (SSA). In addition, we
interviewed officials from the Social Security Advisory Board (SSAB), an
independent federal agency that reviews the policies and programs
administered by SSA and makes recommendations for their
improvement. We also interviewed the eight former public trustees who
served since 1995.

To determine the extent to which the boards have met the statutory
deadline, we identified the transmittal dates of the Trustees reports from
1995 to 2019. To identify the factors accounting for any delays in reports
issuance, we reviewed report development schedules from 1995 to 2019

2
 42 U.S.C. §§ 401(c), 1395i(b), and 1395t(b). There are three boards of trustees: the
Board of Trustees of the OASI and DI Trust Funds, the Board of Trustees of the HI Trust
Fund, and the Board of Trustees of the SMI Trust Fund. They operate using bylaws
adopted in 1995. For the remainder of this report, we use the term “the boards” to
collectively refer to these boards.
3
    Treasury officials provided available working group agendas starting in 2011.




Page 2                                              GAO-19-596 Social Security and Medicare
             and board meeting minutes from 1995 to 2018 and interviewed agency
             officials and former public trustees. We then evaluated the process
             agency officials used to maintain a baseline schedule and update the
             report development schedule using GAO’s guide on best practices for
             schedule management. 4

             We conducted this performance audit from September 2018 to July 2019
             in accordance with generally accepted government auditing standards.
             Those standards require that we plan and perform the audit to obtain
             sufficient, appropriate evidence to provide a reasonable basis for our
             findings and conclusions based on our audit objectives. We believe that
             the evidence obtained provides a reasonable basis for our findings and
             conclusions based on our audit objectives.


             The boards that oversee the Social Security and Medicare trust funds are
Background   technically separate entities under the Social Security Act, but the same
             set of trustees have served as board members for each trust fund and the
             boards meet concurrently. For each board, four of the trustees are ex
             officio, i.e. members by virtue of their office and position: the Secretary of
             the Treasury, Secretary of Labor, Secretary of Health and Human
             Services, and the Commissioner of Social Security. The remaining two
             trustees are members of the public, nominated by the President,
             confirmed by the Senate, and the public trustees must not be from the
             same political party as one another. The public trustee positions were
             established in 1983; 5 they have been vacant since 2015.

             The boards issue two separate Trustees reports each year, one on the
             Social Security trust funds and one on the Medicare trust funds. Under
             the Social Security Act, these reports are due by April 1 of each year. The
             Trustees reports provide information on the present and projected
             statuses of the trust funds, including their projected balances over the
             next 10 years (short-term), the next 75 years (long-term), and the
             assumptions and methods used to make these projections. The reports
             provide estimates of the projected costs and incomes of the trust funds,
             and any dates that the boards project the trust funds’ reserves to become


             4
               GAO, Schedule Assessment Guide: Best Practices for Project Schedules, GAO-16-89G
             (Washington, D.C.: December 2015).
             5
                 Pub. L. No. 98-21, § 341, 97 Stat. 65, 135.




             Page 3                                            GAO-19-596 Social Security and Medicare
                         depleted, among other information about the programs. 6 Because
                         projections are inherently uncertain, the reports include three projection
                         scenarios: intermediate, low-cost, and high-cost alternatives, along with
                         other information about uncertainty. The intermediate scenario is based
                         on assumptions that reflect the boards’ best estimate of future
                         experience. The low-cost scenario makes assumptions that are relatively
                         more favorable with respect to the projected statuses of the trust funds,
                         while the high-cost scenario does the opposite. For example, the low-cost
                         scenario assumes more workers will pay into the trust funds and fewer
                         beneficiaries will receive benefits, while the high-cost scenario assumes
                         fewer workers and more beneficiaries.



Agency Officials and
Trustees Follow a
Collaborative Process
Each Year to Develop
the Trustees Reports

Agency Officials and     Officials in the Social Security Administration Office of the Chief Actuary
Trustees Determine the   (SSA OCACT) and the Centers for Medicare & Medicaid Services Office
                         of the Actuary (CMS OACT) work with other agency officials and trustees
Economic, Demographic,
                         to develop assumptions and draft and revise the Trustees reports in an
and Programmatic         annual cycle, according to agency officials and the board meeting
Assumptions Prior to     minutes and report development schedules we reviewed (see fig. 1). At
Drafting the Trustees    the end of each cycle, the boards have established a working group that
Reports                  is largely responsible for overseeing the day-to-day development of the
                         next year’s report. 7 This working group consists of officials in the four
                         agencies that are led by the ex officio trustees (Treasury, DOL, HHS, and
                         SSA), officials from SSA OCACT and CMS OACT, and the public
                         trustees, when confirmed. All of the working group’s discussions and
                         agreements are subject to the approval of the boards. The Secretary of
                         the Treasury serves as the Managing Trustee and Chairperson of the


                         6
                             Trust fund reserves decline when a trust fund’s costs exceed its income.
                         7
                          The boards first established a working group in 2002 and have re-established it each
                         year since.




                         Page 4                                              GAO-19-596 Social Security and Medicare
boards. 8 Treasury staff has historically coordinated the report
development process, including organizing the development schedule
and hosting the working group and boards’ meetings. The reports are
drafted by SSA and CMS.




8
  There are two sets of bylaws that establish the rules, members, and duties of the boards:
the By-laws of the Board of Trustees of the Federal Old-Age and Survivors Insurance
Trust Fund and the Federal Disability Insurance Trust Fund, and the By-laws of the
Boards of Trustees of the Federal Hospital Insurance Trust Fund and the Federal
Supplementary Medical Insurance Trust Fund.




Page 5                                            GAO-19-596 Social Security and Medicare
                         Figure 1: Annual Cycle for Developing the Trustees Reports




                         Note: The working group consists of officials in the four agencies that are led by trustees (the
                         Departments of the Treasury; Labor; Health and Human Services; and the Social Security
                         Administration), officials from SSA OCACT and CMS OACT, and the public trustees, when confirmed.
                         The working group holds meetings and discussions between cycles.



SSA OCACT and CMS OACT   SSA OCACT and CMS OACT officials we interviewed said they work to
Develop and Propose      update the assumptions—both long-term and short-term—they propose
Assumptions              as the basis for the trust fund projections in the reports. Assumptions are
                         the demographic, economic, and program-specific factors that the
                         actuaries use to model the future financial status of the trust funds (see
                         appendix I). For each assumption, SSA OCACT and CMS OACT go
                         through a process of updating the values for the 75-year projection period
                         as needed and use those updated values as inputs in their models to



                         Page 6                                               GAO-19-596 Social Security and Medicare
                              project future costs and income for the trust funds. As a part of this
                              process, the working group discusses issues that inform the assumptions
                              proposed by SSA OCACT and CMS OACT.

                              The work on assumptions is divided according to the specializations and
                              expertise of the two actuarial offices, and is developed by staff from a
                              range of disciplines, including actuaries, demographers, and economists.
                              SSA OCACT develops the demographic and economic assumptions that
                              are common to both reports, including rates for fertility, mortality, and
                              growth in gross domestic product. SSA OCACT also prepares the
                              programmatic assumptions for Social Security, such as the numbers of
                              retirement and disability beneficiaries and the anticipated income into the
                              trust funds from payroll taxes. CMS OACT prepares the programmatic
                              assumptions that are specific to Medicare, such as the number of
                              Medicare beneficiaries and expected growth in health care costs.

                              SSA OCACT and CMS OACT officials update assumptions and revise
                              their methodologies based on recent data, if a change is warranted. For
                              example, the 2017 Social Security Trustees report projected an increase
                              in the total fertility rate. Information collected in the subsequent year
                              showed that fertility rates had not risen as expected, so officials reduced
                              the fertility rate assumptions for the 2018 report. 9 SSA OCACT officials
                              told us that they look at both the reasonableness of the assumptions
                              individually and in the aggregate, as some assumptions interrelate.
                              According to agency officials we interviewed, the assumptions generally
                              undergo gradual or no changes from year to year, unless there are
                              significant policy changes. SSA OCACT and CMS OACT also update
                              their models by incorporating more recent data into them. For example, in
                              the 2017 Social Security Trustees report, the model for projecting
                              average age benefit levels of retired worker and disabled worker
                              beneficiaries who are newly entitled to benefits used a sample of these
                              beneficiaries from 2013. In the 2018 report, this model was updated to
                              use a sample from 2015.

The Working Group Discusses   The working group considers and works towards consensus on the
and Works Toward Consensus    assumptions proposed by SSA OCACT and CMS OACT. Members of the
on Assumptions                working group meet periodically to discuss the assumptions and come to
                              an agreement on the values for them. In these meetings, the working

                              9
                                The Social Security Trustees reports refer to this assumption as the "assumed near-term
                              total fertility rate."




                              Page 7                                           GAO-19-596 Social Security and Medicare
group often hears presentations from internal or external experts on
specific topics. For example, in one meeting, SSA staff led a presentation
and discussion on Disability Insurance, and DOL staff led a presentation
and discussion on how globalization might affect long-term economic
trends. To inform their discussions, the working group may also review
reports from technical panels or invite panel members to discuss their
findings and recommendations at a working group meeting. 10 For
example, in September 2012, the working group discussed a Medicare
technical panel recommendation that the board continue to present
alternative projections in which average Medicare spending per
beneficiary rises faster than the current law baseline; the working group
and board agreed to implement this recommendation. Throughout the
working group’s activities, the members representing the ex officio
trustees generally serve as a liaison between the trustee for their agency
and the working group. When confirmed, public trustees participate
directly on the working group.

After consideration, the working group finalizes long-term assumptions at
a fall board meeting. The long-term assumptions serve as the basis for
the short-term assumptions and the 75-year trust fund projections. For
each long-term assumption, the boards set the “ultimate value”, i.e. the
constant rate or number that is projected to be met in a particular year
(within 10 years in most cases) and then continued through the remainder
of the 75-year projection period. For example, for the 2019 Trustees
reports, the boards set the ultimate value for the annual change in
covered earnings as a percent of total labor compensation for each year
beginning in 2028 and continuing through 2093. In most cases, according
to agency officials we interviewed, the working group achieves consensus
on the assumptions before the fall board meeting. However, when the
working group is unable to reach consensus, the boards settle any
outstanding issues and tend to either make no changes or incremental
changes over time to avoid major swings in year-to-year projections,
according to some agency officials we interviewed.

Once the long-term ultimate values are set by the boards, the working
group then discusses the short-term assumptions that bridge the gap

10
   These technical panels review the Trustees’ reports, provide technical expertise, and
issue reports. For issues related to the Social Security Trustees report, technical panels
are convened about once every 4 years by the SSAB, an independent federal agency. For
issues related to the Medicare Trustees report, the technical panel is convened
periodically by HHS.




Page 8                                           GAO-19-596 Social Security and Medicare
                             between current data and the ultimate values. The working group first
                             considers and works toward agreement on the short-term economic
                             assumptions and then the health assumptions. Short-term economic
                             assumptions can vary during the early years of the projection period. The
                             projection of Medicare’s HI Trust Fund depletion date is based on detailed
                             short-term growth rate assumptions for individual types of Medicare
                             services, such as inpatient hospital care.

SSA OCACT and CMS OACT       Once the assumptions are set, officials at SSA OCACT develop the
Draft the Trustees Reports   projections that determine the actuarial status and then draft the Social
                             Security Trustees report, and officials at CMS OACT do the same for the
                             Medicare Trustees report. The reports include information on and values
                             of the assumptions, projected financial statuses of the trust funds and
                             programs, actuarial analyses and estimates, and technical information on
                             the methodologies and projections. In addition, the reports note changes
                             to the assumptions, methodology, and projections from prior reports, and
                             explain the implications for the trust funds. The reports also include
                             statements of opinion by the relevant agency’s Chief Actuary regarding
                             whether the techniques and methodologies used are generally accepted
                             within the actuarial profession and whether the assumptions used and the
                             resulting actuarial estimates are reasonable. 11

The Working Group Comments   When the drafts are completed, SSA OCACT and CMS OACT circulate
and Develops Consensus on    them to the working group for comments and agreement. According to
Reports                      one former public trustee, these comments are mostly related to the
                             presentation of the information, such as word choices, as members have
                             previously agreed to the assumptions. SSA OCACT or CMS OACT
                             officials respond to these comments, and make revisions to the reports in
                             several rounds, engaging with the working group for comment on each
                             new version of the reports. As with the earlier round when the working
                             group worked toward consensus on the assumptions, the working group
                             members that represent the ex officio trustees can brief the trustee from
                             their agency and bring any input back to the working group to help ensure
                             that the trustees agree with the reports.




                             11
                                For the Social Security Trustees report, the Chief Actuary of the Social Security
                             Administration provides the opinion. For the Medicare Trustees report, the Chief Actuary
                             of the Centers for Medicare & Medicaid Services provides the opinion.




                             Page 9                                           GAO-19-596 Social Security and Medicare
The Boards Approve and Issue   The final drafts of the Trustees reports are presented and approved at the
Trustees Reports               annual spring meeting of the boards. 12 Under the boards’ bylaws,
                               members of the boards must be present at these meetings to approve the
                               reports. During the meeting, agency officials provide an overview of the
                               reports to the trustees and other attendees, and explain changes in the
                               overall projections from the previous year’s reports. For those trust funds
                               with an estimated depletion date, agency officials explain the estimated
                               dates of depletion and the potential implications for beneficiaries. After
                               any discussion, the trustees sign the reports and the boards formally
                               issue them to Congress.


Public Trustees Can Play       Public trustees, when confirmed, play unique roles as members of the
Unique Roles in                boards and also the working group that develops the Trustees reports.
                               Former public trustees we interviewed said their role was to represent the
Developing and
                               public in the report development process, independent of the ex officio
Presenting the Trustees        trustees and other agency officials in the administration. To become
Reports                        members of the board, public trustees must be nominated by the
                               President and confirmed by the Senate, and the public trustee cannot
                               both be from the same political party. Those we interviewed stressed the
                               importance of not allowing personal and political opinions to influence
                               their work on the Trustees reports. As a result, according to both agency
                               officials and former public trustees, having public trustees in place lends
                               credibility to the reports. Former public trustees stated that they worked
                               closely with their counterpart public trustee to coordinate their comments
                               and input to the working group.

                               Historically, public trustees sometimes questioned or encouraged
                               changes to some assumptions used in the reports, according to former
                               public trustees and some agency officials. When in place, public trustees
                               regularly attend working group meetings, whereas ex officio trustees do
                               not. According to the former public trustees we interviewed, they saw part
                               of their role as facilitating conversations as leaders and moving the group
                               towards consensus on assumptions. Additionally, former public trustees
                               and some agency officials said trustees are more hesitant to change the
                               assumptions in the reports when there are no public trustees in place, out
                               of concern that any change could be viewed as politically motivated. For

                               12
                                We refer to this meeting as the spring board meeting even in instances when the
                               meeting is held in the summer due to delays in issuing the reports.




                               Page 10                                         GAO-19-596 Social Security and Medicare
example, in 2017 the boards discussed whether or not to change the
long-range real interest rate assumption from the rate used in the
previous year’s Trustees reports. The boards decided to keep the
assumptions unchanged, in part because there were no public trustees in
place. 13

When they are in place, public trustees can also help communicate the
message of the Trustees reports to policy makers and the public. As an
example, the Trustees reports can be technical and difficult to
understand; to address this, the public trustees introduced a summary of
the reports in 1991, which presented the reports’ findings in a way that is
more accessible to the general public. Former public trustees said they
were able to inform policy makers on the contents of the reports through
congressional testimony and direct conversations with congressional
staff. One former public trustee reported that he was a resource for the
media, spending hours on the phone providing his perspective and
explaining the reports’ implications for policy decisions. In addition, public
trustees published a separate message that allowed them to present what
they believe to be the main idea of the reports. 14




13
   According to one former public trustee and the Treasury and SSA officials we spoke to,
keeping the assumptions unchanged in the absence of public trustees to avoid potential
controversy was a good practice, but that after several years the assumptions would have
to change or risk being out of date.
14
   The public trustees’ message, in years when there are confirmed public trustees, is
published on the SSA OCACT website along with the trustees’ message and summary
report. See https://www.ssa.gov/oact/TRSUM/.




Page 11                                          GAO-19-596 Social Security and Medicare
The Boards Have
Frequently Missed
the Statutory
Deadline and Have
Not Effectively
Managed the Report-
Development
Schedule


Trustees Reports Have      The boards issued the Trustees reports to Congress after the April 1
Been Issued Late in Part   statutory deadline in 17 of the 25 years from 1995 to 2019, including
                           every year from 2009 through 2019 (see fig. 2). Since 2009, the boards
to Allow More Time for
                           have issued the reports at least 2 months late six times; they only issued
Updating Reports and Due   the reports this late one time in the 14 years from 1995 to 2008.
to Scheduling Issues




                           Page 12                                  GAO-19-596 Social Security and Medicare
Figure 2: Timeliness of Required Reports on the Social Security and Medicare Trust Funds (1995-2019)




                                         Note: For each year, the Social Security and Medicare Trustees reports were issued on the same
                                         day. Department of the Treasury officials confirmed the sources of the dates.


                                         Agency officials and former public trustees provided a number of reasons
                                         why the Trustees reports have been late in recent years. Agency officials
                                         and former public trustees said they may delay reports in order to include
                                         the impact of late-breaking legislation or policy changes on the
                                         assumptions or data. SSA OCACT told us that this decision is based on


                                         Page 13                                               GAO-19-596 Social Security and Medicare
(1) if the policy change results in substantial changes to assumptions and
(2) if the policy change affects a policy that is directly governing a trust
fund. For example, agency officials and former public trustees stated that
the Patient Protection and Affordable Care Act (PPACA), enacted on
March 23, 2010, significantly contributed to the 2010 reports being issued
August 5, 2010, over 4 months past the deadline. PPACA significantly
affected many of the factors that were the basis for the Medicare Trustees
report projections, such as reducing projected Medicare expenditures
through various policy changes, including a change to the payment
formula for the Medicare Advantage program—the private health plan
alternative to traditional Medicare. According to one former public trustee,
if the boards had issued a report that did not reflect the changes made by
PPACA, it would not have been applicable to the current outlook of the
Medicare trust funds and therefore not as useful to Congress and the
public.

Agency officials have also reported that there have been instances of
waiting for more complete or recent data sets to become available before
calculating the actuaries’ projections. According to CMS officials, a
tradeoff exists between updating data and meeting the deadline. For
example, Treasury officials told us that because the working group
decided that CMS OACT should not wait for January 2019 Medicare
Advantage enrollment data, the 2019 Trustees reports were issued earlier
(April 22) than they would have been if they had waited for the complete
end of year data, as they had in previous years.

Agency officials and public trustees also cited difficulties in scheduling the
spring board meetings as a factor that contributed to delays in issuing the
Trustees reports. The boards’ bylaws require the annual reports to be
adopted by a majority of the trustees who are present and voting.
However, sometimes Treasury staff experienced difficulty scheduling the
meeting. According to Treasury officials responsible for scheduling the
meeting, they generally wait until the first drafts of the Trustees reports
are completed before they schedule the spring board meeting to avoid
having to reschedule the meeting if the draft reports are provided after the
working group’s internal deadline. For the last 15 years (2005-2019),
report development schedules from SSA OCACT indicated that the draft
reports were provided to the working group after the internal deadline 12
times. In the other 3 years, the report development schedules did not
show the actual date that the draft reports were provided. As a result of
scheduling the meeting later in the process, Treasury staff has sometimes
not been able schedule a meeting that all of the Trustees can attend prior
to the statutory deadline of April 1.


Page 14                                    GAO-19-596 Social Security and Medicare
                           Other challenges that contribute to delays include government shutdowns
                           and staff having conflicting concurrent responsibilities, according to some
                           agency officials or former public trustees. When the government shut
                           down for 11 business days in October 2013, the board meeting minutes
                           show that it affected the timelines for the 2014 Trustees reports.
                           However, according to HHS, government shutdowns have never
                           materially delayed the release dates for the Trustees reports. Some
                           former public trustees and one agency official we spoke to stated that
                           agency officials involved in the report process sometimes had other
                           duties competing for their time, which could result in delaying their work
                           on the Trustees reports, while other agency officials stated this was not a
                           factor.


The Process for Managing   Agency officials’ scheduling process is inconsistent with GAO’s guide on
the Schedule for           best practices for schedule management. 15 Agency officials and former
Developing the Trustees    public trustees said they attempted to meet the statutory deadline each
                           year, but did not believe issuing the report after the deadline created
Reports Does Not Reflect   serious negative consequences. As a result, agency officials and former
Best Practices             public trustees involved with developing the reports in recent years said
                           they developed a schedule designed to meet the deadline knowing it
                           would most likely not be met. Several agency officials and former public
                           trustees described the schedule as “ambitious” and difficult to achieve. If
                           the schedule is unrealistic from the start of the process, and if involved
                           parties view it as an unlikely goal, rather than the expected outcome, then
                           the schedule does not serve as a useful tool for managing the timely
                           development of the Trustees reports.

                           In addition to designing an unrealistic Trustees reports schedule, agency
                           officials did not always document actual progress in meeting scheduled
                           dates or modify the schedule in a way that would allow them to overcome
                           early setbacks. Treasury officials, who organize the schedule for
                           developing the Trustees reports, stated that the initial proposed schedule
                           is updated only once during the report process, after the first drafts of the
                           reports are completed. According to best practices, the schedule should
                           be updated regularly with actual progress and remaining work. Without




                           15
                             GAO, Schedule Assessment Guide: Best Practices for Project Schedules, GAO-16-89G
                           (Washington, D.C.: December 2015).




                           Page 15                                      GAO-19-596 Social Security and Medicare
doing so, it could be difficult to respond to actual events while still meeting
set deadlines. 16

Treasury has not regularly archived the final version of the schedule with
the dates that milestones were actually met. According to best practices,
the final iteration of the schedule that was actually followed should be
archived and used to inform and improve future schedules. 17 Treasury
officials were able to provide us with the archived, updated schedules for
only 6 of the last 25 years, and these schedules were incomplete. While
these updated schedules showed the actual dates that the draft reports
were provided and the planned dates for later milestones, they did not
include the dates for milestones before the draft reports were provided or
the actual dates for the later milestones, including the reports’ issuance
dates.

Further, although the boards have regularly missed the statutory
deadline, the initial report-development schedules have not significantly
changed in recent years. Based on the proposed schedules for the
Trustees reports that are presented in the spring board meeting minutes
we reviewed, the initial schedules for each milestone in the report
development process, such as obtaining agreement on assumptions or
circulating drafts, has not significantly changed in the last 6 years,
although the schedules have consistently proven difficult to meet (see
table 1). Without recording the actual report production schedule that was
followed, participating officials do not have the historical data that would
assist them in making meaningful and effective changes to future
schedules.




16
     GAO-16-89G.
17
     GAO-16-89G.




Page 16                                    GAO-19-596 Social Security and Medicare
Table 1: Initial Trustees Report Development Schedules Did Not Significantly Change From 2014-2019

Planned milestones for each
annual report cycle                                               2014                2015      2016           2017           2018            2019
Social Security Administration                             10/18/13              10/17/14    10/16/15       10/14/16       10/13/17       10/15/18
Office of the Chief Actuary (SSA
OCACT) circulates proposed long-
term assumptions
Working group agrees on long-term                          10/28/13              10/27/14    10/26/15       10/24/16       10/23/17       10/25/18
assumptions
SSA OCACT circulates proposed                                12/9/13              12/7/14     12/7/15        12/5/16        12/4/17       12/10/18
short-term assumptions
Working group agrees on short-                             12/16/13              12/15/14    12/14/15       12/12/16       12/11/17       12/17/18
term SSA OCACT assumptions
The Center for Medicare &                                        2/6/14             2/5/15     2/4/16         2/2/16         2/1/17         1/31/18
Medicaid Services Office of the
Actuary (CMS OACT) circulates
proposed short-term health
assumptions
Working group agrees on CMS                                  2/13/14              2/12/15     2/11/16         2/9/17         2/8/18          2/7/19
OACT health assumptions
Social Security Trustees report draft                        2/13/14              2/12/15     2/11/16         2/9/17         2/8/18          2/7/19
circulated for comments - planned
Social Security Trustees report draft                            5/8/14             5/1/15     3/3/16   Not available       3/29/18         2/14/19
circulated for comments - actual
Medicare Trustees report draft                               2/21/14              2/20/15     2/19/16        2/17/17        2/16/18         2/15/19
circulated for comments - planned
Medicare Trustees report draft                                   5/7/14           5/21/15     3/11/16   Not available        4/6/18         2/26/19
circulated for comments – actual
Trustees reports issued—planned                                  4/1/14           3/31/15     3/29/16        3/28/17        3/27/18         3/26/19
Trustees reports issued—actual                               7/28/14              7/22/15     6/22/16        7/13/17         6/5/18         4/22/19
Source: GAO analysis of Treasury and SSA OCACT report-development schedules. | GAO-19-596



                                                            Finally, according to best practices, it is important that stakeholders,
                                                            including decision makers, have access to information on the progress of
                                                            the project. 18 Agency officials and former public trustees stated that they
                                                            do not have a policy or practice of informing Congress of delays or
                                                            changes to the schedules for the Trustees reports, even in years when
                                                            the board issues the reports months after the deadline. Given this,
                                                            Congress, the recipient of the Trustees reports, remains uninformed of
                                                            the reports’ release date or the factors contributing to a delay in any given

                                                            18
                                                                 GAO-16-89G.




                                                            Page 17                                          GAO-19-596 Social Security and Medicare
                      year. This uncertainty may hinder Congress from planning legislative
                      sessions in advance that would use the findings of the Trustees reports.
                      For example, congressional committees of jurisdiction may be hindered in
                      scheduling hearings on or around the time of the reports’ release date
                      and having access to the latest data from the reports to inform their
                      oversight.


                      Trustees and agency officials set out at the start of each report cycle with
Conclusions           a schedule to meet the statutory deadline to issue the Social Security and
                      Medicare reports each year by April 1. However, over the past 25 years,
                      they have mostly issued the reports after the deadline. Some of the
                      factors contributing to the boards delivering the reports late may seem
                      reasonable to agency officials and trustees. For example, investing time
                      to make the report consistent with new legislation impacting Social
                      Security or Medicare programs, or waiting for end of year data to be
                      available, may make the report more useful than if it contained older
                      information. However, other factors related to the management of the
                      schedule for developing the reports, such as not formally tracking the
                      reports’ progress or adjusting the schedule based on lessons learned in
                      prior years, may have contributed to delays.

                      Taking steps to improve the management of the report-development
                      schedule would better position the trustees and agency officials to
                      anticipate and plan for scheduling the spring boards meeting and to meet
                      the statutory deadline in future years. Additionally, recognizing that there
                      may continue to be instances in which the issuance of the reports will be
                      delayed, establishing a policy to inform Congress of potential delays and
                      factors contributing to those delays would enhance Congress’s ability to
                      conduct oversight and make decisions about these important programs.


                      We are making the following two recommendations to the Secretary of
Recommendations for   the Treasury:
Executive Action
                      The Secretary of the Treasury, as Chairperson of the Boards of Trustees,
                      should work with the other trustees to take steps—in consultation with the
                      chief actuaries of SSA and CMS—to improve the management of the
                      report development schedule in order to provide the Trustees reports to
                      Congress by the statutory deadline. These steps could include regularly
                      updating the schedule using actual progress and archiving the final
                      iteration of the schedules. (Recommendation 1)



                      Page 18                                   GAO-19-596 Social Security and Medicare
                     The Secretary of the Treasury, as Chairperson of the Boards of Trustees,
                     should work with the other trustees to establish a policy to inform
                     Congressional committees of jurisdiction when the trustees determine
                     that the reports are expected to miss the issuance deadline. This
                     outreach should include 1) the factors that are contributing to delays, and
                     2) the reports’ expected issuance dates. (Recommendation 2)


                     We provided a draft of this report to the Secretary of the Treasury, the
Agency Comments      Secretary of Health and Human Services, the Secretary of Labor, and the
and Our Evaluation   Commissioner of Social Security for review and comment. Treasury and
                     SSA provided formal written comments, and both agencies agreed with
                     our recommendations. (See appendixes II and III.) Treasury, SSA, and
                     HHS provided technical comments, which we incorporated as
                     appropriate. DOL had no comments.


                     As agreed with your office, unless you publicly announce the contents of
                     this report earlier, we plan no further distribution until 30 days from the
                     report date. At that time, we will send copies to the appropriate
                     congressional committees, the Secretary of the Treasury, the Secretary of
                     Health and Human Services, the Secretary of Labor, the Commissioner of
                     Social Security, and other interested parties. In addition, the report will be
                     available at no charge on the GAO website at http://www.gao.gov.




                     Page 19                                    GAO-19-596 Social Security and Medicare
If you or your staff have any questions about this report, please contact
Elizabeth Curda at (202) 512-7215 or curdae@gao.gov or James
Cosgrove at (202) 512-7114 or cosgrovej@gao.gov. Contact points for
our Offices of Congressional Relations and Public Affairs may be found
on the last page of this report. GAO staff who made key contributions to
this report are listed in appendix IV.

Sincerely yours,




Elizabeth H. Curda
Director,
Education, Workforce,
  and Income Security




James Cosgrove
Director,
Health Care




Page 20                                  GAO-19-596 Social Security and Medicare
Appendix I: Assumptions Discussed in the
              Appendix I: Assumptions Discussed in the
              2019 Social Security and Medicare Trust Fund
              Reports


2019 Social Security and Medicare Trust
Fund Reports
              Table 2: Assumptions Discussed in the 2019 Social Security and Medicare Trust
              Fund Reports

               2019 Social Security assumption                                    2019 Medicare assumption
               categories                                                         categories
               Demographic                                                        Demographic
               •   Fertility                                                      •   Fertility
               •   Mortality                                                      •   Mortality
               •   Immigration                                                    •   Immigration
               •   Total population                                               Economic
               •   Life expectancy                                                •   Gross domestic product
               Economic                                                           •   Average earnings
               •   Productivity                                                   •   Private nonfarm business
               •   Price inflation                                                    multifactor productivity
               •   Average earnings                                               •   Consumer Price Index
               •   Real-wage differential                                         •   Real-wage differential
               •   Labor force participation and                                  •   Interest rates
                   unemployment                                                   Health Cost Growth (Annual Percentage
               •   Gross domestic product                                         Change in Cost Per Beneficiary)
               •   Interest rates                                                 •   Medicare Expenditures
               Program-Specific                                                   •   Hospital Insurance
                                                                                      (Part A)
               •   Automatically adjusted program
                   parameters                                                     •   Supplementary Medical Insurance
                                                                                      (Part B)
               •   Covered employment
                                                                                  •   Supplementary Medical Insurance
               •   Insured population                                                 (Part D)
               •   Old-Age and Survivors Insurance                                •   Total Medicare
                   beneficiaries
               •   Disability Insurance beneficiaries
               •   Covered and taxable earnings, taxable
                   payroll, and payroll tax contributions
               •   Income from taxation of benefits
               •   Average benefits
               •   Scheduled benefits
               •   Illustrative scheduled benefit amounts
               •   Administrative expenses
               •   Railroad retirement financial interchange
              Source: 2019 Social Security and Medicare Trustees Reports. | GAO-19-596




              Page 21                                                              GAO-19-596 Social Security and Medicare
Appendix II: Comments from the Department
             Appendix II: Comments from the Department
             of the Treasury



of the Treasury




             Page 22                                     GAO-19-596 Social Security and Medicare
Appendix III: Comments from the Social
              Appendix III: Comments from the Social
              Security Administration



Security Administration




              Page 23                                  GAO-19-596 Social Security and Medicare
Appendix IV: GAO Contacts and Staff
                   Appendix IV: GAO Contacts and Staff
                   Acknowledgments



Acknowledgments

                   Elizabeth Curda at (202) 512-7215 or curdae@gao.gov
GAO Contacts
                   James Cosgrove at (202) 512-7114 or cosgrovej@gao.gov


                   In addition to the contact named above, Mark Glickman (Assistant
Staff              Director), Gregory Giusto (Assistant Director), Paul Schearf (Analyst-in-
Acknowledgments:   Charge), Christie Enders, and Samuel Gaffigan made key contributions to
                   this report. Additional assistance was provided by Bill Boutboul, Juana
                   Collymore, Robert Dacey, Alex Galuten, Yvette Gutierrez, Janice Latimer,
                   Emei Li, Sheila R. McCoy, Art Merriam, Mimi Nguyen, Stacy Ouellette,
                   Oliver Richard, Joseph Silvestri, Dawn Simpson, Ardith Spence, Almeta
                   Spencer, Frank Todisco, and Walter Vance.




(103013)
                   Page 24                                 GAO-19-596 Social Security and Medicare
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