Medicare and Social Security will begin to spend more than they take in by 2020, according to new projections released Wednesday by the programs’ trustees.
The projections indicate that if Congress fails to act on the entitlement programs, Medicare’s hospital-insurance trust fund will exhaust its reserves by 2028, which is two years earlier than previously estimated. Social Security faces exhaustion by 2034, at which point, benefits would not be eliminated, but a 21 percent cut across the board for program participants would be triggered.
Medicare covers approximately 55 million Americans and program costs are projected to rise due to an aging population. Social Security is funded by two separate trusts split up between retirement benefits and disability benefits. In 2015, 49 million Americans collected retirement benefits and close to 11 million receive payments from the disability fund according to CNNMoney.
By 2028, Medicare Part A would only be able to pay out 87% of expected benefits while Medicare Part B and D will be fully financed indefinitely since they draw their funding from the Supplementary Medical Insurance (SMI) Trust Fund, which is authorized by Congress and requires automatic funding.
On Capitol Hill, Republicans voiced their frustrations over the inaction on reforms to the two large entitlement programs. Sen. Orrin Hatch, Chairman of the Senate Finance Committee, released a statement that called the report a “stark reminder about the significant financial challenges facing entitlement programs” and that the report “demonstrates how little has changed to improve and reform Medicare and Social Security’s retirement program under the Obama Administration.” Chairman of the Ways and Means committee, Kevin Brady of Texas said that, “If the Obama Administration continues its irresponsible inaction, Social Security and Medicare will fail to serve our children and grandchildren in the future.”
Juliegrace Brufke contributed to this report
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