Workplace Issues

Medicare Trustees Downgrade Finances

Medicare's hospital insurance fund will be depleted by 2026, according to new estimates.
William SprouseJune 8, 2018
Medicare Trustees Downgrade Finances

A new report from the trustees who oversee the federal government’s Medicare program says its hospital insurance fund will be depleted in 2026, three years earlier than projected.

Meanwhile, Social Security had to tap its trust fund to pay for the program this year, the first time it has had to do so since 1982. That program’s trustees said its two trust funds would be depleted in 2034.

In a statement, Treasury Secretary Steven Mnuchin said “lackluster economic growth in previous years” and an aging population have contributed to shortages for both Social Security and Medicare.

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“The programs remain secure,” Mnuchin said, adding Medicare “is on track to meet its obligations to beneficiaries well into the next decade.”

The hospital insurance trust fund applies to Medicare Part A, which covers inpatient care, including care received in a skilled nursing facility and in some homes. That program is still expected to be able to pay out more than 90% of its scheduled benefits.

In the case of Social Security, economist Dean Baker of the Center for Economic and Policy Research said that “since the average inflation-adjusted benefit is projected to be roughly 20% higher in 2034 than it is today, the payable benefit would still be roughly the same as what retirees get today.”

In a statement, the AARP said the report showed challenges and singled out the need for action on health care in the election year. “In particular, we need to take further steps to lower the cost of health care, especially the ever-rising price of prescription drugs,” the group said.

More than 62 million Americans get Social Security benefits. About 60 million people get health insurance through Medicare, most of them 65 or older.

President Donald Trump campaigned on a promise not to cut Social Security or Medicare.

Last year’s report predicted the Social Security fund would be depleted in 2034 as well.