Wednesday, 17 October, 2018

Medicare insolvent in 2026, Social Security by 2034

Medicare fund will run out by 2026 trustees say	 	 	 			Christopher Furlong  Getty Images Medicare fund will run out by 2026 trustees say Christopher Furlong Getty Images
Gustavo Carr | 06 June, 2018, 16:54

This year, the program's cost will outstrip total income by $2 billion and non-interest income by $85 billion, the report said.

Medicare's Board of Trustees blamed the earlier depletion forecast on lower payroll taxes in 2017 as a result of lower wages, less revenue from taxing Social Security benefits and higher-than-expected spending previous year.

Income to the Medicare fund is expected to be lower than estimated past 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 trustees report is considered an annual wake-up call for the beleaguered programs, though consensus around ways to secure their future remains elusive.

The Social Security program will pass an ugly milestone this year, as its costs exceed its income, according to its trustees. "Lack-luster economic growth in previous years, coupled with an aging population, has contributed to the projected shortages for both Social Security and Medicare".

More than 62 million retirees, disabled workers, spouses and surviving children receive Social Security benefits.

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Both the cost-of-living increase and the Medicare outpatient premium are not officially determined until later in the year, and the initial projections can change.

Sixty-two million people, including 45 million retired workers, were receiving OASDI benefits at the end of 2017.

"The current trajectories in health spending are both unsustainable and unmatched by increases in quality", Alex M. Azar II, the secretary of health and human services and a trustee of Medicare and Social Security, said on Tuesday.

The trustees estimate that by 2034 the combined trust funds for Social Security - which help fund the old age and disability programs - will run dry.

Congress has punted on the issue of shoring up the solvency for both entitlement programs for years.

Democrats want to expand the safety net by spending more on health care and education. Or benefits could be cut by 21 percent for those who become eligible this year or later, said Tim Shaw, a senior policy analyst at the Bipartisan Policy Center. But when the money is actually needed to pay for benefits, economists say a government deep in debt could be hard pressed to make good.