Medicare to Become Insolvent In 8 Years, Social Security in 16

Medicare to Become Insolvent In 8 Years, Social Security in 16

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

Last year, total program income - which includes payroll taxes, taxation of Social Security benefits and interest earnings - amounted to $997 billion, exceeding total expenditures of $952 billion. Medicare provides health insurance for about 60 million people, most of whom are age 65 or older. But when interest income is excluded from the equation, program costs exceed income throughout the 75-year projection period.

Excluding federal debt payments, Medicare and Social Security together make up about 40 percent of total USA government spending.

Costs to the fund will also be slightly higher than last year's estimates, "mostly due to higher-than-expected spending in 2017, legislation that increased hospital spending and higher Medicare Advantage payments", the trust fund report said.


President Trump campaigned on a promise that he wouldn't cut Social Security or Medicare, but he hasn't offered a rescue plan for either program. 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. "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".

The news was not all bad at Social Security.

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

Rather than cutting benefits, the Democratic-leaning Social Security Works coalition supports expanding benefits as a solution to the nation's looming retirement crisis by asking the wealthy to contribute more.

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. Advocates for the elderly said today there should be no cuts to Social Security benefits.

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