Medicare health care program fund to be exhausted by 2026

Lynette PayneJun 08, 2018

One of Medicare's trust funds will not be able to cover medical bills starting in 2026, three years earlier than expected, according to an annual federal report.

At this rate, the combined asset reserves of Social Security's twin retirement and disability trust funds would become depleted by 2034, the same as projected a year ago, with 79% of the benefits payable at that time, according to the report.

And for the first time since 1982, Social Security costs will exceed the money being put into it this year. However, certain long-term issues persist.

Excluding federal debt payments, Medicare and Social Security together make up about 40 percent of total USA government spending.

More than 60 million Americans benefit from both programs, which provide a guaranteed income and healthcare for many retirees and the disabled.

Mnuchin vowed that the Trump administration's efforts to cut taxes, ease federal regulations and improve trade deals would help both Medicare and Social Security survive over the long term.

They attributed the circumstances to last year's lower-than-expected wages, revenue-cutting legislation, heightened spending and an aging USA population. And 2017's Tax Cuts and Jobs Act is making the problem worse by cutting Medicare and Social Security taxes further reducing available revenues. Charles Schumer of NY, the Democratic leader.

Challenges for both programs are exacerbated by the aging of the baby boomer population, without an equivalent proportion of workers available to replace them in the workforce.

"Our estimate could change, because we still have several months of CPI data to go before the COLA is announced in October", Mary Johnson, The Senior Citizens League's Social Security policy analyst, said in a statement. The ratio of workers to beneficiaries fell to 3.3 in 2005 and then to 2.8 in 2016. Medicare is widely seen as a more hard problem that goes beyond the growing number of baby boomers retiring. At the end of 2017, the program had about 62 million beneficiaries. "The truth is, Social Security doesn't add a dime to the deficit and is the retirement bedrock of millions of Americans and we should keep it that way", Representative Deutch said.

Two other Medicare funds - Part B, which covers doctor and outpatient visits and Part D, which covers prescription drugs - are reset each year based on projected costs.

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