Medicare To Become Insolvent In 2026, Three Years Earlier Than Forecast

The Social Security Administration’s main campus is seen in Woodlawn Md. Medicare’s financial problems have gotten worse and Social Security’s can’t be ignored forever

The report said the less favorable outlook for Medicare's hospital trust fund resulted from "adverse changes" in program income and costs. Income to the Medicare fund is expected to be lower than estimated previous 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.

More than 60 million Americans benefit from both programs, which provide a guaranteed income and healthcare for many retirees and the disabled. The report said that if the funds are depleted, the program could pay about three-quarters of benefits.

"As in past years, the trustees have determined that the fund is not adequately financed over the next 10 years", the report said, citing in part lower payroll taxes collected on lowered wages in 2017 and rising hospital spending. With Social Security that could mean sharply reduced payments for some retirees, many of whom are already on tight budgets.

Medicare's problems are widely seen as more hard to solve.

So far that does not appear to have happened, to judge from the annual report of the trustees of Social Security and Medicare, a group that includes three Trump cabinet officers.

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. Social Security and Medicare account for 42% of all federal spending. That money is invested in special government securities, which also collect interest.

House Speaker Paul Ryan, R-Wis., has always been an advocate for overhauling the programs, introducing a voucher-like system for Medicare and calling for partially privatizing Social Security.

Many Democrats don't see a need for immediate action.

"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", Treasury Secretary Steven Mnuchin said Tuesday.

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