Medicare Will Be Insolvent In 2026, Sooner Than Expected; Social Security To Follow In 2034

Medicare's trust fund has just eight more years of solvency until 2026, and Social Security will be exhausted in 2034, according to Thursday projections by the trustees for the government programs. 

While Social Security's expected depletion is unchanged from last year's projection, the date for Medicare's demise was moved up three years. 

Social Security is made up of several funds; the Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI) are combined for the designation OASDI, while Medicare's Hospital Insurance trust fund is designated HI. 

If allowed to expire, beneficiaries would face an immediate reduction of around 20% in benefits.

The costs of Medicare and Social Security will increase substantially as a percentage of GDP through 2035 due to a sharp rise in beneficiaries as baby-boomers retire, and lower birth rates that have persisted since the baby boom resulting in slower growth of the labor force and GDP. 

Social Security’s annual cost as a percentage of GDP is projected to increase from 4.9 percent in 2018 to about 6.1 percent by 2038, then decline to 5.9 percent by 2052 before generally rising to 6.1 percent of GDP by 2092. Under the intermediate assumptions, Medicare cost rises from 3.7 percent of GDP in 2018 to 5.6 percent of GDP by 2035 due mainly to the growth in the number of beneficiaries, and then increases further to 6.2 percent by 2092. The growth in health care cost per beneficiary becomes the larger factor later in the valuation period, particularly in Part D.

Over 62 million retirees, disabled workers, spouses and surviving children are tapping into Social Security benefits with an average monthly benefit of $1,294 for all beneficiaries. Medicare, meanwhile, provides health insurance to around 60 million people - most of whom are over the age of 65. 

The revised dates for Medicare's demise raises the chances of a major fiscal battle facing Congress. 

The individual tax cuts implemented as part of the GOP tax overhaul are also set to expire at the end of 2025, meaning that lawmakers could have to navigate major changes in federal taxing and spending in short order, just as they did with the 2012 “fiscal cliff.”

Over a long time frame of 75 years, the hypothetical combined Social Security trust fund faces a shortfall of around $13.2 trillion, up from $12.5 trillion last year. -Washington Examiner

Closing the gap would require an immediate hike in the payroll tax of 2.78% to 15.18% or an immediate reduction in current benefits of 17%, according to the Trustees. 

If there's a silver lining in the report, it's that fewer people are applying for and receiving disability insurance through Social Security while the economy improves. Perhaps this will help the disability insurance fund last past its projected demise in 2032

Comments

tmosley Uchtdorf Wed, 06/06/2018 - 07:49 Permalink

A better solution would be a moonshot program to cure/reverse aging. With a population that no longer gets old, we could eliminate something like 80 or even 90% of Federal expenditures, and shave a large chunk off of people's household budgets (most medical expenditures are a result age-related diseases). Retirees go back to work in young bodies, and save up enough for a perpetually sustainable retirement, perhaps opening their own businesses. People stop pushing off things hoping that they die before they become a problem, because they know they probably won't. Not to mention the amazing benefits that come from having the best minds continuing to function at full power instead of withering away in old age and eventually dying.

We are very close as it is.

In reply to by Uchtdorf

Last of the Mi… Luc X. Ifer Wed, 06/06/2018 - 08:40 Permalink

Well, on the plus side Obamacare did it's part to reduce senior longevity through it's mountains of regulation. Most seniors can't even comprehend the rule making quagmire they're entangled in, to say nothing of understanding where an how their deductibles and premiums are decided. 

In reply to by Luc X. Ifer

loveyajimbo Delving Eye Wed, 06/06/2018 - 11:42 Permalink

Simple solution... time for reasonable MEANS TESTING for Social Security and Medicare... and a massive audit/cleansing of Medicaid fraud. 

Impose a 25% tax on money transfers out of country to replenish the funds, install a 5 year moratorium of financial aid to muslim countries, Israel and Europe, direct those funds into Social Security/Medicare.

In reply to by Delving Eye

PrayingMantis Last of the Mi… Wed, 06/06/2018 - 09:06 Permalink

 

    ... the Medicaid fiasco is now brewing in Louisiana ...

     ... “ ... Medicaid loss could cause 30,000 residents to be evicted in Louisiana ... “ ...

           >>> https://www.iadvanceseniorcare.com/article/medicaid-loss-could-cause-30000-residents-be-evicted-louisiana ...

 

     .... where would those 30,000 seniors go after eviction? 

 

In reply to by Last of the Mi…

PrayingMantis rejected Wed, 06/06/2018 - 10:32 Permalink

 

   ... @rejected : ... “ ... Medicaid is different than Medicare. Most elderly are on Medicare. ... “ ...

 

   ... not quite ... they are related ... Medicare is federal and Medicaid is both state and federal ... and the crux of the matter is, these poor senior citizens paid for both when they were gainfully employed and now they’d be on their own because .gov had mis-appropriated taxpayers’ contributions to the other countries’ well-being and welfare via CONgress’ omnibus bill and other gifts 💰intended for genocidal activities in the Middle East ... 

 

     .... here’s a better explanation about Medicare and Medicaid ...

   ... 

  • Medicare is a federal program that provides health coverage if you are 65 and older or have a severe disability, no matter your income.
  • Medicaid is a state and federal program that provides health coverage if you have a very low income.
  • If you are eligible for both Medicare and Medicaid (dually eligible individual), you can have both, and they will work together to provide you with health coverage at very low cost to you.

 

   ... source : >>> https://www.medicareinteractive.org/get-answers/medicare-basics/medicare-coverage-overview/differences-between-medicare-and-medicaid 

   ... 

In reply to by rejected

mccvilb PrayingMantis Wed, 06/06/2018 - 20:09 Permalink

Letters went out regarding the new Medicare/Medicaid System and brand new cards supposedly were issued to NJ and PA citizens. USPS has our back... in the mail two months now. MC/MC will no longer be a part of the Social Security Admin. New cards, dealer. 

Does the Donald know, or is this more covert Barry-shite shenanigans? So far, only NJ and PA were earmarked to receive the first batch, with VA, DE and DC next. At this rate the reverse ace, McStain will be POTUS before any of us ever sees one and they'll both be DOA. 

Also, when did SSD Insurance merge with SS? They are billed separately on payroll checks and have always had separate funding and qualifications status. Hell, who are they kidding? Clinton cleaned out those two trust funds six elections ago.

In reply to by PrayingMantis

techpriest Stuck on Zero Wed, 06/06/2018 - 12:19 Permalink

For perspective, SS/Medicare are ~60% of the national budget, the military is ~25%, and everything else fits into the remaining 15%. That 15% also gets shrunk a little every year, on a percentage basis, as the other two keep growing.

The point being, is you wanted to increase spending on the entitlements by 10%, you would have to cut the military by more than 20%, and I'm guessing there would be a coup if that happened. Or you could cut the rest of the government by 35%, which I would approve of, but who is willing to face all of the screaming mothers who find out that the Dept. of Education is closed permanently?

This is the financial end game. Every area needs to be cut, and the whole scope of government reduced, and while either of us agree on this, the average American is not, and does not understand how dire the situation is. But in the off chance that they do, again the solution will be to reduce the scope of government by eliminating programs and departments, and putting in sunsets to the entitlements. The other option would be a default, and possible collapse i.e. forced reduction in the scope of government.

In reply to by Stuck on Zero

cheech_wizard pods Wed, 06/06/2018 - 10:37 Permalink

Milk with Vitamin D, naturally... (yes, there is history here, prevention of rickets, etc....)

Normally I hate posting links from left wing propaganda sites, but occasionally a few articles are semi-well written.

https://www.huffingtonpost.com/entry/why-vitamin-d-in-milk_us_58da7a68e…

Standard Disclaimer: Make mine chocolate! For the rest of you, drink more Ovaltine.

In reply to by pods

MoreFreedom tmosley Wed, 06/06/2018 - 12:38 Permalink

Invest your own money into your "moonshot program".  There's no reason the government should be doing it.  And you ignore all the seniors now if their lifespans are quickly and substantially increased who'll want to continue collecting on the Social Security and Medicare for a lot longer. 

Basically, your idea will make these socialist income redistribution plans even more insolvent. 

I'd instead suggest a "moonshot program" to phase these programs out.

In reply to by tmosley

Nunyadambizness 4johnny Wed, 06/06/2018 - 08:14 Permalink

Good luck with that.  Social Security STARTED as a savings/insurance policy when it was initiated after the Great Depression.  However, the DEMOCRAPS changed all that in the '60's when they saw the BILLIONS in the trust fund, wanted to spend it, and decided to put Social Security as a line item on the federal expenditures.  In that one fell swoop, through lies and deceit (which is nothing new for Democraps), they doomed the project to failure and bankruptcy.   They have known about the potential failure for over 40 years, and have done nothing but kick the proverbial can down the road.  Republicraps are no better.

It was inevitable, and has been known for decades.

In reply to by 4johnny

MoreFreedom Nunyadambizness Wed, 06/06/2018 - 12:44 Permalink

You're mistaken that "Social Security STARTED as a savings/insurance policy when it was initiated" or that any "trust fund" ever existed.  It was always a socialist income redistribution scheme, whereby the money paid in is used to pay current beneficiaries. 

https://www.creators.com/read/walter-williams/11/13/congressionally-dup…

And why blame the Democrats given all the RINOs that say they want to protect these schemes (and they do, because they want government to control the money).

In reply to by Nunyadambizness