New Report Says Medicare Will Run Out Of Money Sooner Than Expected

Medicare fund will run out by 2026 trustees say	 	 	 			Christopher Furlong  Getty Images

The main trust fund behind Medicare, the USA health-care program for the elderly and disabled, will be exhausted in 2026, three years earlier than was projected a year ago, the government said Tuesday.

The projections are the first from the administration since Trump signed a $1.5 trillion tax cut into law in December. The problems in the entitlement programs only add to those woes.

The Medicare trust fund will be depleted in 2026, the administration said. Last year's report put it three years later. Taken separately, the fund for retirees is now expected to be depleted in 2034, a year earlier than last year's report, while the disability insurance reserves run out in 2032, four years later than projected last year.

The House Ways and Means Social Security Subcommittee plans to hold a hearing Thursday to examine Social Security's solvency, and will focus on findings of the 2018 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds, which is due out this week. Some 45 million retirees and six million dependents receive Social Security benefits.

Each year, the trustees project the long-term finances of Medicare, which covers about 58 million Americans.

Together, the two programs have been credited with dramatically reducing poverty among older people and extending life expectancy for Americans.

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Medicare Part A's trust fund is funded through payroll taxes, split between employer and employee.

However, as now projected, it is highly unlikely that economic growth absent larger reforms could solve the programs' huge budget quagmire.

But in a statement, Treasury Secretary Steve Mnuchin says the government's economic agenda will generate the long-term growth needed to help stabilize both Medicare and Social Security.

The report says the other trust fund, which covers Medicare Parts B and D, is expected to be financed through the next 10 years and beyond. Its giant trust fund for inpatient care won't be able to fully cover projected medical bills starting at that point.

For Medicare, the coffers are expected to be empty in 2026, just eight years from now. And 2017's Tax Cuts and Jobs Act is making the problem worse by cutting Medicare and Social Security taxes further reducing available revenues.

"Taking action sooner rather than later will permit consideration of a broader range of solutions and provide more time to phase in changes so that the public has adequate time to prepare", the trustees concluded.

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