Published: Fri, June 08, 2018
Health Care | By Gwendolyn Kim

Social Security to tap reserves to cover 2018 benefits

Social Security to tap reserves to cover 2018 benefits

The solvency of the Medicare trust fund, the main USA public health insurance program, deteriorated over the last year and could be exhausted by 2026 - two years earlier than previously estimated. Income to the Medicare fund is expected to be lower than estimated a year ago 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.

Social Security this year will spend more than it takes in, the program's trustees said in a new report Tuesday that signals the official beginning of the program's slide into insolvency. The four top officials serve as the Social Security and Medicare trustees, along with two independent trustees who are supposed to represent the public. At that point the program would only be able to pay out 91% of promised benefits.

"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.

In principle, the supposed to be paying forward its Social Security and Medicare obligations by building up trust funds to cover future costs.

The trustees also expect Medicare spending "will increase in future years at a faster pace than either aggregate workers' earnings or the economy overall". Social Security, Medicare, and Medicaid account for 62 percent of all federal spending, according to the financial experts at The Balance.

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The trustees urged Congress to consider options to reduce or eliminate the long-term financing shortfalls in Social Security and Medicare "as soon as possible".

"When Congressional Republicans sold their tax scam to the American people they left out the fact that while the windfalls mostly line the pockets of corporations and the wealthy, the deficits they used to pay for them will fuel their threats to cut Social Security".

Medicare's problems are widely seen as more hard to solve. That works out to about $31 a month. About a quarter of Part B costs are paid for by beneficiary premiums with the rest from the federal budget.

Both the cost-of-living increase and the Medicare outpatient premium are not officially determined until later in the year, and the initial projections can change.

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