Medicare Fund Will Be Exhausted Sooner Than Expected

 

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The Medicare Hospital Insurance Trust Fund will have sufficient funds to cover its obligations until 2028, two years earlier than previously projected, trustees announced Wednesday. Social Security’s retirement and disability trust fund reserves are projected to be exhausted in 2034, the same year as previously estimated. (MarketWatch)

The trustees project that the trust fund for Part A, which covers hospital costs for seniors, will run dry by 2028. That’s two years earlier than they projected last year, due to lower than expected payroll taxes and a slower-than-estimated rate of reduction in inpatient use of hospital services.  (CNN Money)

The U.S. government spent $648 billion on Medicare in 2015, representing 3.6% of the nation’s gross domestic product, according to the report. That is projected to grow to 5.6% by 2040, primarily because of the aging population, and 6% by 2090. (USA Today)

The annual report card from the trustees of both programs contrasts sharply with an election debate that has shifted away from how to restore solvency for Social Security and instead is focusing on whether benefits should be increased. Wednesday’s report shows that both programs’ trust funds see annual outflows exceed income early next decade, making the solvency challenge a more urgent concern for whoever becomes the next president.   (The Wall Street Journal)

The trustees urged U.S. politicians to enact new laws to keep that from happening, though they said the funding gap over the longer run appears narrowed thanks to signs that healthcare costs would be lower in the future. (Reuters)

 

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