Medicare could run out of money in eight years unless Congress acts to either increase funding or radically restructure the program.
According to Medicare report from program trustees, the program’s trust fund covering inpatient care will be unable to pay full benefits starting in 2026.
The report was written by economists and nonpolitical actuaries mostly, although three of the trustees are Trump cabinet officials.
Administration officials previously had said that Medicare would fall short on funding by 2029.
While President Trump has pledged not to cut the old age healthcare benefit, no long-term solution plan to save it has been revealed either.
Well over 60 million people are currently enrolled in Social Security and Medicare. That number could soar to over 87 million by 2040.
Both retirement programs account for nearly 40% of all federal budget expenditures. Medicare alone is roughly equal to all U.S. defense spending at 3.2 of GDP in 2016.
President Trump seems to have done little to operationally restructure the Medicare program during his first year and a half in office.
Higher taxes to fund the program were not on the table. Rather, the GOP cut both corporate and individual tax rates, with the individual cuts expiring in 2025, right before Medicare is forecast to go under.
Treasury Secretary Steven Mnuchin says that the administration is betting on a strong and improving economy to improve Medicare’s impending insolvency issues.
“The administration’s economic agenda, tax cuts, regulatory reform and improved trade agreements will generate the long-term growth needed to help secure these programs,” said Mnuchin.
The insolvency report from the Medicare program trustees does not share the same conclusion.
The report states that the impending insolvency concerns are the result of recent “adverse changes” to program costs and income.
The Treasury added a fact sheet to the report explaining that the Medicare Fund in 2018 will receive less income than last year.
The reason is tax cuts. “Lower payroll taxes attributable to lowered wages in 2017 and lower levels of projected gross domestic product,” the report states.
Medicare decline
Most legislative and political authorities do not see the Medicare insolvency issue being solved anytime soon.
In April 2018, the Congressional Budget Office said that debt and federal deficits would significantly increase within the decade.
Federal expenditures in the long term will go towards increases in domestic and military spending as well.
Most notably, the Tax Cuts and Jobs Acts, signed into law by President Trump in December 2017, only modestly affects the financing of Medicare viability.
The Trump tax cuts also repealed an Obama-era law that issued penalties for going without health insurance.
As a direct result of that repeal, Medicare payments for uncompensated care at some hospitals will increase.
While many factors can be blamed for Medicare cost increases, solutions are not forthcoming by Republicans nor Democrats.
The average Medicare beneficiary cost is $13,000 a year currently. That cost will increase to $17,000 a year by 2023.
