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10 June 2018, 08:27 | Silvia Roy
Government Medicare will become insolvent in 2026 Social Security to follow in 2034
According to the annual Social Security Board of Trustees report, the year when the combined trust fund reserves are projected to become depleted (if Congress does not act before then, they optimistically remind us), is 2034 - the same as projected last year. Income to the Medicare fund is expected to be lower than estimated previous 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 annual report by trustees of the giant fund also covers Social Security, which millions of older Americans depend on for income, just as it does for many disabled.
In another calculation, the trustees estimated the 75-year actuarial deficit for the combined trust funds at 2.84 percent of taxable payroll, up slightly from the 2.83 percent of taxable payroll estimated in last year's report.
Of the two programs, Medicare faces the greatest fiscal challenges as medical costs increase and the United States ages, with many baby boomers set to retire in the next several years.
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".
The report did not change its insolvency date for Social Security, projecting it has enough funding until 2034.
"As in past years, the Trustees have determined that the fund is not adequately financed over the next 10 years", the report said.
"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. But the fund that helps tens of millions of retirees is expected to be depleted a year earlier than projected a year ago, while the outlook for the disability trust fund is more favorable.
"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", Mnuchin said in a statement.
A major reason for Social Security's long-term financial problems is a decline in the number of workers for each beneficiary. It has added 7 million people since 2013. About a quarter of Part B costs are paid for by beneficiary premiums with the rest from the federal budget.
Medicare costs will rise from last year's 3.7 percent of GDP to 5.8 percent by 2038.
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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