Trustees report warns Medicare finances worsening

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

The solvency of the Medicare trust fund, the main United States public health insurance program, deteriorated over the last year and could be exhausted by 2026 - two years earlier than previously estimated.

Funding for Medicare will be depleted in 2026, three years earlier than what was projected in last year's report by the federal trustees for the program.

The report says Social Security will become insolvent in 2034.Unless lawmakers act, both programs face the prospect of being unable to cover the full cost of promised benefits.

The White House claims the long-running economic boom will help secure Medicare and Social Security's future. But, hey, they only need three-quarters of their food, home, and medical coverage, right?

"It doesn't mean Medicare is going to go bankrupt in less than 10 years", said Juliette Cubanski, associate director of Kaiser Family Foundation's program on Medicare policy.

While costs have exceeded net income since 2010, this is the first time in more than three decades that spending is expected to outweigh total income, by about $2 billion, meaning asset reserves will decline.

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The trustees report is considered an annual wake-up call for the beleaguered programs, though consensus around ways to secure their future remains elusive. Medicare Part B, which covers outpatient visits, and Part D, which pays for most prescription drugs, are paid for in part by general revenue and by individuals' premiums. 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.

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.

The Centers for Medicare and Medicaid Services (CMS), however, said President Trump's fiscal 2019 budget would strengthen "would strengthen the fiscal integrity of the Medicare program".

"However, certain long-term issues persist", the statement added. That estimate is used as a benchmark, even though under the law the separate trust funds would be exhausted independently of each other.

At that time, there will be sufficient income coming in to pay 79% of scheduled benefits - a figure that's slightly higher than the 77% projected in last year's report. 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.

Total Medicare costs will grow from approximately 3.7% of GDP in 2017 to 5.8% of GDP by 2038.

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