Trustees report warns Medicare finances worsening

07 June, 2018, 04:54 | Author: Kara Nash
  • Chip Somodevilla  Getty Images North America

The United States' largest publicly funded medical insurance program will run out of money sooner than expected, according to an official projection released on Tuesday. The OASI trust fund is now expected to be depleted in late 2034 compared to last year's estimate of early 2035.

The Social Security program's costs are expected to exceed its income this year, marking the first time that has happened since 1982 and forcing the US government to dip into the retirement system's trust fund to pay benefits to participants.

This is the first time that's happened since the Reagan admin.

Medicare's trust fund pays for hospital visits, nursing care and related services under what's known as Part A of the program, which was created in 1965.

President Trump pledged during the 2016 campaign to leave Social Security and Medicare benefits untouched, putting him on a crash course with Republicans on Capitol Hill who have said they wanted to tackle the programs' problems by limiting future benefit increases. This is because premium income and general revenue income are reset each year to cover the expected rise in costs.

Sixty-two million people, including 45 million retired workers, were receiving OASDI benefits at the end of 2017. With Social Security that could mean sharply reduced payments for retirees, many of whom are already on tight budgets.


"Lawmakers have a broad continuum of policy options that would close or reduce Social Security's long-term financing shortfall", the report noted. That's the amount the Social Security's trustees said tax income alone could cover.

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.

"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 on Tuesday.

Rather than cutting benefits, the Democratic-leaning Social Security Works coalition supports expanding benefits as a solution to the nation's looming retirement crisis by asking the wealthy to contribute more.

"With modest legislated increases in revenue, Social Security will be able to pay all scheduled benefits for the foreseeable future", the nonprofit organization said in a background report issued in advance of the trustees' report.

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