The financing for future Medicare and Social Security costs is still on very shaky ground, according to both departments.
Financing: Current Status
The financial futures of Medicare and Social Security remain unchanged from last year. However, the 2019 trustees’ reports released earlier this week, warn Congress that both programs face serious long-term financial problems.
Without changes in the law, the Medicare health insurance trust fund will be short on money in money in 2026. At that time it will only be able to cover 89 percent of its’ obligations.
As for Social Security’s two funds — retiree benefits and and disability payments; both will be depleted in 2035. At that time Social Security will only have enough money to cover 80 percent of its’ scheduled benefits.
Moreover, the trustees also reported that in 2020, the total annual cost of the Social Security program will outstrip its annual income. The last time this happened was in 1982. If Congress does not act, Social Security will have to take money from its’ $3 trillion in trust funds to maintain benefit payments.
Fix Options Congress Can Take
Congressional lawmakers are considering several options to fix the shortfall in Social Security’s financing, the report says.
The Medicare trustees also offer a similar message. But, in the meantime, Medicare projects that its’ expenses will continue to increase faster than either workers’ earnings or the overall economy. Rising health care costs, including the high cost of prescription drugs, continue to drive the increase in Medicare spending.
Another factor is that the senior citizen population will also increase. The trustees estimate that Medicare spending will increase from 3.7 percent of the nation’s gross domestic product in 2018 to 5.9 percent by 2038. They will continue increasing until it reaches 6.5 percent of the country’s economy by 2093.
Consequently, this year’s report demonstrates the need for timely and effective action to put Medicare and Social Security finances on a solid footing. One thing all parties agree on — there is a sense of urgency to get this fixed.