Medicare Faces Insolvency in 2026, Three Years Earlier than Last Year's Projection

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If that doesn't sound dire enough, in their annual report, the Social Security trustees said that Medicare's hospital insurance fund will be depleted in 2026, reserves for the fund that pays disability benefits would be emptied in 2032, and all Social Security reserves would be exhausted by 2034. And the trustees now say that program is going to be insolvent in 2026 - or roughly the same time as we are from the passage of Obamacare.

"Social Security and Medicare are the federal government's two largest programs, and millions of Americans heavily rely on their benefits".

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. And 2017's Tax Cuts and Jobs Act is making the problem worse by cutting Medicare and Social Security taxes further reducing available revenues. But, hey, they only need three-quarters of their food, home, and medical coverage, right?

The trustees report is considered an annual wake-up call for the beleaguered programs, though consensus around ways to secure their future remains elusive. General revenues will finance roughly three-quarters of SMI costs, and premiums paid by beneficiaries nearly all of the remaining quarter. 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.

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.

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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 programs remain secure..."

"However, certain long-term issues persist", the statement added.

Despite looming shortfalls, U.S. Treasury Secretary Steven Mnuchin said accelerated economic growth under the current administration would help to bolster both programs' coffers in the coming years. That reflects a.06 percentage point worsening due to extending the projection period and valuation date by one year, and a.04 percentage point improvement due to new data and improved projection methods, the report said.

Social Security recipients are likely to see a cost-of-living increase of about 2.4 percent next year, said government number-crunchers who produced the report.

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