Trustees report warns Medicare finances worsening

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Medicare trustees say the trust fund that covers Medicare Part A, which pays for hospital stays, home health services, nursing homes and hospice care, will run out of money sooner than expected.

The Social Security program's costs are expected to exceed its income this year, marking the first time that has happened since 1982 and forcing the US government to dip into the retirement system's trust fund to pay benefits to participants.

"As in past years, the Trustees have determined that the fund is not adequately financed over the next 10 years", the report said.

Together the two programs have been credited with dramatically reducing poverty among older people and extending life expectancy for Americans.

The financial future of both entitlement programs was further complicated by one of President Trump's most controversial decisions.

In fact, Social Security will still be able to pay 79% of benefits even if Congress does nothing.

Medicare's problems are widely seen as more hard to solve.

Medical costs have long outpaced economic growth, and despite some slowdowns in cost over the past few years, that has not changed.

That's what the Social Security and Medicare trustees projected in their 2018 annual report released Tuesday. The public trustee posts are now unfilled.

Democrats want to expand the safety net by spending more on health care and education.

But federal deficits keep rising, and the recent Republican tax-cut bill is only expected to add to the debt. The program's trustees said the shortfall trend could worsen in the decades to come.

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.

Higher deficits mean less maneuvering room for policymakers when the day of reckoning finally arrives for Social Security and Medicare.

Medicare Part A's trust fund is funded through payroll taxes, split between employer and employee.

"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 and lead them to a more stable path", Mnuchin said in a statement on Tuesday.