Medicare, Social Security running out of money faster than expected

Henrietta Strickland
June 10, 2018

The report says Social Security will become insolvent in 2034 - no change from the projection a year ago.

The United States' largest publicly funded medical insurance program will run out of money sooner than expected, according to an official projection released on Tuesday. Its projected income also was lower than estimated in 2017 due to lower payroll taxes attributable to lowered wages for 2017.

The report said the less favorable outlook for Medicare's hospital trust fund resulted from "adverse changes" in program income and costs.

The projections are also influenced by higher payments to private Medicare Advantage health plans and new laws, such as the tax overhaul cleared previous year.

The long-term solvency is also affected by lawmakers' repeal in February of a controversial Obamacare effort to cut spending known as the Independent Payment Advisory Board, according to the official.

This article was reprinted from khn.org with permission from the Henry J. Kaiser Family Foundation. It helps pay hospital, home health services, nursing home costs and hospice costs.

The National Committee to Preserve Social Security and Medicare advocacy group responded to the report by urging the Trump administration to allow the program to negotiate prices with drugmakers. "Among all the steps we could take to maintain the program's financial health, this is one of the most crucial".

President Trump pledged during the 2016 campaign to leave Social Security and Medicare benefits untouched, putting him on a crash course with Republicans on Capitol Hill who have said they wanted to tackle the programs' problems by limiting future benefit increases. The program provides health insurance to some 60 million people, most of whom are over 65 years old.

Trustees said the trust fund for hospital expenses is not sufficiently financed over the next decade.

At the end of 2017, the OASDI program was providing benefit payments to about 62 million people: 45 million retired workers and dependents of retired workers, 6 million survivors of deceased workers, and 10 million disabled workers and dependents of disabled workers.

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 programs remain secure..." However, certain long-term issues persist. And 2017's Tax Cuts and Jobs Act is making the problem worse by cutting Medicare and Social Security taxes further reducing available revenues.

The Social Security trust funds for benefits for the elderly and disability insurance could be depleted by 2034, the same as last year's projection. That estimate is used as a benchmark, even though under the law the separate trust funds would be exhausted independently of each other.

Other reports by Click Lancashire

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