US Social Security, Medicare finances worsening

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

Medicare will run out of money sooner than expected, and Social Security's financial problems can't be ignored either, the government said Tuesday in a sobering checkup on programs vital to the middle class.

Program trustees say Medicare will become insolvent in 2026 - three years earlier than previously forecast - and Social Security in 2034.

President Trump pledged during the 2016 campaign to leave Social Security and Medicare benefits untouched, putting him on a crash course with Republicans on Capitol Hill who have said they wanted to tackle the programs' problems by limiting future benefit increases.

"The current trajectories in health spending are both unsustainable and unmatched by increases in quality", Alex Azar, the secretary of health and human services and a trustee of Medicare and Social Security, said Tuesday. But, hey, they only need three-quarters of their food, home, and medical coverage, right?

Social Security's total cost is projected, for the first time since 1982, to exceed its total income including both tax receipts and interest in 2018 and to remain higher throughout the projection period, the report said.

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

At the same time, the monthly Medicare "Part B" premium for outpatient care paid by most beneficiaries is projected to rise by about $1.50, to $135.50.

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"Lackluster economic growth in previous years, coupled with an aging population, has contributed to projected shortages for both Social Security and Medicare", he said in a statement.

The annual funding update marks the first such report since Congress did away with that panel, which was created to cut Medicare costs if spending grew too fast.

Social Security covers 62 million people, split among retired workers and their dependents, survivors of workers who've died and disabled people.

"The programs remain secure", Treasury Secretary Steven Mnuchin said in a statement. That estimate is used as a benchmark, even though under the law the separate trust funds would be exhausted independently of each other.

His $1.5 trillion tax cut program reduced expected revenues for the two programs over coming years, The Wall Street Journal reported.

Medicare spending as a percentage of gross domestic product totaled 3.7 percent in 2017, and the trustees project it will increase to at least 6.2 percent by 2092.

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