Trustees warn Medicare's financial problems worsening

The Trump administration's response, essentially, is to take credit for the booming economy and cite it as a reason not to worry about the two biggest entitlement programs in the federal budget.

Here's the problem. There are no such "trust funds".

"As in past years, the Trustees have determined that the fund is not adequately financed over the next 10 years", the report said.

The program is now expected to deplete its funds by 2026, down from last year's estimate of 2029. Stores for the retirement program will be exhausted a year earlier, though, in 2034.

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.

More than 62 million retirees, disabled workers, spouses and surviving children receive Social Security benefits. The average monthly payment is $1,294 for all beneficiaries.

In 2017, Medicare covered 58.4 million people, with 49.5 million older than 65.

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

But Trump has declined to embrace a major restructuring of Social Security or Medicare, as some previous Republican presidents have.

However, as now projected, it is highly unlikely that economic growth absent larger reforms could solve the programs' huge budget quagmire.

The White House is required by law to tell Congress about how it will ensure Medicare's long-term solvency if official projections show a worsening in the program's long-term financing.

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.

But in a statement, Treasury Secretary Steve Mnuchin says the government's economic agenda will generate the long-term growth needed to help stabilize both Medicare and Social Security. Both numbers are expected to rise as the population ages making the financial health of both programs integral to Washington's future health as well. The program will have to dip into its almost $3 trillion trust fund to cover benefits, The Wall Street Journal reports. That is three years earlier than projected last year, Marketwatch noted.

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. And 2017's Tax Cuts and Jobs Act is making the problem worse by cutting Medicare and Social Security taxes further reducing available revenues.

(Copyright © 2015. All Rights Reserved.)
 
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