Medicare to be exhausted by 2026, three years earlier than expected

  • Medicare to be exhausted by 2026, three years earlier than expected

Medicare to be exhausted by 2026, three years earlier than expected

If that doesn't sound dire enough, in their annual report, the Social Security trustees said that Medicare's hospital insurance fund will be depleted in 2026, reserves for the fund that pays disability benefits would be emptied in 2032, and all Social Security reserves would be exhausted by 2034. Income to the Medicare fund is expected to be lower than estimated past year because of "lower payroll taxes attributable to lowered wages in 2017 and lower levels of projected gross domestic product", the Treasury said in a "fact sheet" accompanying the report.

The report said the total annual cost of Social Security is projected to exceed total annual income in 2018 for the first time since the Reagan era, meaning the program will have to tap into reserves.

The forecast for Medicare, meanwhile, is a bit worse than last year's.

The Centers for Medicare and Medicaid Services (CMS), however, said President Trump's fiscal 2019 budget would strengthen "would strengthen the fiscal integrity of the Medicare program".

"Social Security and Medicare are the federal government's two largest programs, and millions of Americans heavily rely on their benefits".

A new report is heightening concerns about the financial future of Medicare. Mnuchin added that "long-term issues persist".

The combined Social Security trust funds are slated to run dry in 2034, and that will force benefits to be cut more than 20 percent.

"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".

"As in past years, the trustees have determined that the fund is not adequately financed over the next 10 years", the report said, citing in part lower payroll taxes collected on lowered wages in 2017 and rising hospital spending. At that point Social Security will be able to pay only 79% in promised benefits to retirees and disabled beneficiaries.

In 1960, there were about five workers for every Social Security beneficiary.

Medicare spending as a percentage of gross domestic product totaled 3.7 percent in 2017, and the trustees project it will increase to at least 6.2 percent by 2092. It will decline further to about 2.2 by 2035, when most baby boomers will have retired, officials said. That works out to about $31 a month. Medicare Part B, which covers outpatient visits, and Part D, which pays for most prescription drugs, are paid for in part by general revenue and by individuals' premiums.

The annual funding update marks the first such report since Congress did away with that panel, which was created to cut Medicare costs if spending grew too fast.