Tuesday, 18 September, 2018

Social Security to tap reserves to cover 2018 benefits

Melissa Porter | 06 June, 2018, 22:43

Income to the Medicare fund is expected to be lower than estimated past year 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.

Medicare's hospital insurance fund, meanwhile, will become insolvent by 2026, or three years sooner than projected last year.

For the first time since 1982, Social Security has to dip into the trust fund to pay for the program this year. In reality, it has been running annual deficits since 2010, and the insolvency date has moved up eight years.As the Social Security crisis keeps getting closer, the political parties are moving further away from doing anything about it.What's scary is that Social Security is relatively easy to fix when compared to Medicare, a program where the rising retirement population is interacting with growing healthcare costs. About 23 percent of older married couples rely on Social Security as their main source of income, according to the program.

A separate projection released on Tuesday showed it will become insolvent in 2034 - the same estimate as previous year. It's also the unpredictability of health care costs, which can be jolted by high-priced breakthrough cures, and which regularly outpace the overall rate of economic growth. The report says that income still needs to increase faster than the economy to cover future growth. Medicare Part B, which covers outpatient visits, and Part D, which pays for most prescription drugs, are paid for in part by general revenue and by individuals' premiums.

The Cabinet secretaries for Treasury, Health and Human Services, and Labor usually participate in the annual release of the report, along with the Social Security commissioner, and take questions from reporters. None of those top officials was present Tuesday; an aide cited scheduling conflicts.

The four top officials serve as the Social Security and Medicare trustees, along with two independent trustees who are supposed to represent the public. The public trustee posts are now unfilled.

President Donald Trump says he won't cut Social Security or Medicare, but hasn't offered a rescue plan for the long run.

House Speaker Paul Ryan, R-Wis., has always been an advocate for overhauling the programs, introducing a voucher-like system for Medicare and calling for partially privatizing Social Security.

The Congressional Budget Office said in April that federal deficits and debt would soar in the coming decade, following passage of the tax overhaul and legislation to increase military and domestic spending.

Last year's tax law, which cut taxes on Social Security benefits, helped exacerbate the shortfall.

Medicare Part A's trust fund is funded through payroll taxes, split between employer and employee. That money is invested in special government securities, which also collect interest.