Social Security to tap reserves to cover 2018 benefits

Henrietta Brewer
June 9, 2018

The report also forecasts that Medicare's giant trust fund for inpatient care won't be able to cover projected medical bills starting in 2026, three years earlier than previously expected.

The Social Security trust funds for benefits for the elderly and disability insurance could be depleted by 2034, the same as last year's projection.

To ensure both Social Security and Medicare remain solvent for decades to come, they have three basic choices: they can raise the payroll taxes paid into the programs by both employees and employers, they can cut benefits for some or all beneficiaries, or they can do some combination of the two.

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.

At that time, there will be sufficient income coming in to pay 79% of scheduled benefits - a figure that's slightly higher than the 77% projected in last year's report. Options include raising the maximum income cutoff for imposing Social Security taxes, now $127,200.

The trustees report is considered an annual wake-up call for the beleaguered programs, though consensus around ways to secure their future remains elusive.

Washington State had 1,190,127 Medicare enrollees in 2015 and 1,319,176 Social Security recipients in 2017. During the same period, about 62 million people received benefits, including retired and disabled workers, their eligible family members and survivors of deceased workers.

Many Democrats, meanwhile, argue the problem is that the programs aren't generous enough.

But Trump has declined to embrace a major restructuring of Social Security or Medicare, as some previous Republican presidents have.

The trustees also expect Medicare spending "will increase in future years at a faster pace than either aggregate workers' earnings or the economy overall". In our aging society, all of that will have to occur in the context of a growing ratio between retirees and the working-age population.

Treasury Secretary Steven Mnuchin said the latest report shows that Social Security and Medicare remain secure, but long-term problems persist.

The newspaper says the report, issued by four Trump administration officials who are trustees for both Medicare and Social Security, cites policy changes such as the new GOP tax law as the reason.

Total Medicare costs will grow from approximately 3.7% of GDP in 2017 to 5.8% of GDP by 2038.

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