Medicare Fund to Fall Short in 2026, Sooner Than Last Forecast

Frederick Owens
June 8, 2018

"Lawmakers have a broad continuum of policy options that would close or reduce Social Security's long-term financing shortfall", the report noted.

The financial outlook for Medicare's Hospital Insurance Trust Fund deteriorated in the past year, and Social Security still faces serious long-term financial problems, President Donald Trump's administration said Tuesday. Continuing payroll tax revenues to the combined trust funds would be sufficient to cover 79 percent of scheduled benefits starting in 2034. Yesterday, the Social Security Administration (SSA) released its annual Trustees Report, which indicated that while the program remained strong in 2017, improvements should be made to ensure that full costs and benefits are payable into the foreseeable future and beyond. The depletion date for the Disability Insurance Trust Fund, meanwhile, was extended to 2032 from last year's estimate of 2028, with 96% of benefits still payable, according to the report. Democrats insist that the programs would remain solvent as long as the rich pay their "fair share", while Republicans claim that they simply need to eliminate "waste, fraud, and abuse" in the federal budget.

Treasury Secretary Steven Mnuchin said in a statement that there's time to fix the problems.

Those scenarios, of course, assume that Congress does not act in the interim, which many industry observers have said for years is unlikely. Medicare "is on track to meet its obligations to beneficiaries well into the next decade". "Now is the time Congress should prepare for the future, not by threatening workers' benefits, but by expanding Social Security".

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Basically, Social Security and Medicare are spending more than they will take in due to increased costs and the decline of workers paying into the system.

Social Security recipients are likely to see a cost of living increase of about 2.4 percent next year, working out to roughly $31 a month, government experts said.

The aging population and rising health care costs cause Parts B and D projected costs to grow steadily from 2.1% of GDP in 2017 to approximately 3.6% of GDP in 2037. Medicare is widely seen as a more hard problem that goes beyond the growing number of baby boomers retiring.

Information for this article was contributed by Robert Pear of The New York Times, and by Ricardo Alonso-Zaldivar and Andrew Taylor of The Associated Press.

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