Trustees report warns Medicare finances worsening

Social Security now running a deficit; Medicare to hit insolvency three years earlier than projected

In a separate report, the government said that Social Security would be able to pay full benefits until 2034, the same estimate as past year.

Government trustees reported that a combination of rising costs and an aging population cut the life expectancy of Medicare's trust fund to just 8 years.

The report said the total annual cost of Social Security is projected to exceed total annual income in 2018 for the first time since Ronald Reagan's presidency, meaning the program will have to tap into reserves.

The projections are the first from the administration since Trump signed a $1.5 trillion tax cut into law in December. Medicare spent $710 billion in 2017, according to the report, making it the single biggest purchaser of health services in the U.S. The trustees include Treasury Secretary Steven Mnuchin and Health and Human Services Secretary Alex Azar. After that, the government predicts it will be able to pay 91 percent of promised benefits.

Trump administration officials instead are counting on a strong economy to improve the solvency of Social Security and Medicare.


Of the two programs, Medicare faces the greatest fiscal challenges as medical costs increase and the USA ages, with many baby boomers set to retire in the next several years.

The trustees report is considered an annual wake-up call for the beleaguered programs, though consensus around ways to secure their future remains elusive.

"When Congressional Republicans sold their tax scam to the American people they left out the fact that while the windfalls mostly line the pockets of corporations and the wealthy, the deficits they used to pay for them will fuel their threats to cut Social Security".

"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. It will decline further to about 2.2 by 2035, when most baby boomers will have retired, officials said.

Cubanski also said that Americans with higher incomes and more lucrative Social Security benefits will benefit from federal tax cuts that will lower paycheck deductions. About a quarter of Part B costs are paid for by beneficiary premiums with the rest from the federal budget. This is because premium income and general revenue income are reset each year to cover the expected rise in costs.

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