Trustees report warns Medicare finances worsening

Trustees report warns Medicare finances worsening

The U.S. government's healthcare program for the elderly will exhaust its reserves for hospital insurance in 2026, three years earlier than last year's forecast, the Social Security and Medicare Boards of Trustees said in a report on Tuesday.

The Social Security system is in nearly the same shape as a year ago for its retirement benefits and in a better position for its disability benefits, the program's trustees reported Tuesday. In 2005, President George W. Bush was dismissed as an alarmist for highlighting projections that the program would begin spending more money on benefits than it takes in starting in 2018 and that its "trust fund" would be depleted in 2042.

Together, the two programs have been credited with dramatically reducing poverty among older people and extending life expectancy for Americans.

Mnuchin said in a statement that there's time to fix the problems. Medicare is widely seen as a more hard problem that goes beyond the growing number of baby boomers retiring. General revenues will finance roughly three-quarters of SMI costs, and premiums paid by beneficiaries nearly all of the remaining quarter.

Medicare costs will rise from last year's 3.7 percent of GDP to 5.8 percent by 2038. None of those top officials was present Tuesday; an aide cited scheduling conflicts.

To ensure both Social Security and Medicare remain solvent for decades to come, they have three basic choices: they can raise the payroll taxes paid into the programs by both employees and employers, they can cut benefits for some or all beneficiaries, or they can do some combination of the two.

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.

Many Democrats, meanwhile, argue the problem is that the programs aren't generous enough.

But speaking to reporters on Tuesday, Treasury officials said the cuts were set to decrease revenues for both programs. Some Republicans say that will change if promised economic growth from tax cuts boosts government revenue.

Higher deficits would leave less maneuvering room for policymakers when the day of reckoning finally arrives for Social Security and Medicare.

In principle, the U.S.is supposed to be paying forward its Social Security and Medicare obligations by building up trust funds to cover future costs. That money is invested in special government securities, which also collect interest.

Program trustees said Congress must act to beef up the program's account in order to sustain existing services.

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