On Tuesday, Social Security and Medicare Board of Trustees released their 2018 Annual Report which estimated significant shortfalls in Medicare as early as 2026 - three years earlier than last projected - and that the Social Security Trust Fund will be depleted by 2034, the same year as previously reported, but concerning all the same. 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 Social Security system is in nearly the same shape as past year for its retirement benefits and in a better position for its disability benefits, the program's trustees reported Tuesday.
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. By contrast, the government said past year that the trust fund would be exhausted in 2029.
Challenges for both programs are exacerbated by the aging of the baby boomer population, without an equivalent proportion of workers available to replace them in the workforce.
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".
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The report said the less favorable outlook for Medicare's hospital trust fund resulted from "adverse changes" in program income and costs.
The trustees estimated that, if no action is taken, the Disability Insurance (DI) Trust Fund would be unable to pay full benefits in 2028.
Each year, the trustees project the long-term finances of Medicare, which covers about 58 million Americans.
"The administration's economic agenda - tax cuts, regulatory reform, and improved trade agreements - will generate the long-term growth needed to help secure these programs and lead them to a more stable path", Mnuchin said in a statement. At that point Social Security will be able to pay only 79% in promised benefits to retirees and disabled beneficiaries. The ratio of workers to beneficiaries fell to 3.3 in 2005 and then to 2.8 in 2016. Medicare is widely seen as a more hard problem that goes beyond the growing number of baby boomers retiring. The number of Medicare beneficiaries is expected to surge to 89 million in 2040 from 60 million today, according to Medicare actuaries. General revenues will finance roughly three-quarters of SMI costs, and premiums paid by beneficiaries nearly all of the remaining quarter. Medicare recipients' monthly premiums change annually based on these costs.