Medicare trust funds will be insolvent starting 2026
Jun 06 2018 by Kathy Alvarado
The main trust fund behind Medicare, the USA health-care program for the elderly and disabled, will be exhausted in 2026, three years earlier than was projected a year ago, the government said Tuesday.
"As in past years, the Trustees have determined that the fund is not adequately financed over the next 10 years", the report said.
The program is now expected to deplete its funds by 2026, down from last year's estimate of 2029.
Last year, total program income - which includes payroll taxes, taxation of Social Security benefits and interest earnings - amounted to $997 billion, exceeding total expenditures of $952 billion.
Medicare, the program that provides health care for older Americans and those who are disabled, is covered by two big trust funds.
The Social Security program's costs are expected to exceed its income this year, marking the first time that has happened since 1982 and forcing the US government to dip into the retirement system's trust fund to pay benefits to participants.
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Medicare's Board of Trustees blamed the earlier depletion forecast on lower payroll taxes in 2017 as a result of lower wages, less revenue from taxing Social Security benefits and higher-than-expected spending previous year. "The Administration's economic agenda - tax cuts, regulatory reform, and improved trade agreements - will generate the long-term growth needed to help secure these programs and lead them to a more stable path".
The country's main welfare program for retirees, Social Security, also faces an uncertain future.
President Donald Trump says he won't cut Social Security or Medicare, but hasn't offered a rescue plan for the long run. It's not just the growing number of beneficiaries as the baby boom generation continues moving into retirement. Legislative changes also contributed to the expected shortfall, according to a report from the program's trustees.
Democrats have for months asserted that Republicans would use the deficit - swollen by tax cuts - as "an excuse to cut Social Security and Medicare", in the words of Senator Chuck Schumer of NY, the Democratic leader.
Democrats want to expand the safety net by spending more on health care and education.
"With modest legislated increases in revenue, Social Security will be able to pay all scheduled benefits for the foreseeable future", the nonprofit organization said in a background report issued in advance of the trustees' report.