According to a report released Tuesday, trustees who oversee the Medicare fund said it will be depleted in 2026, three years earlier than expected.
The program is financed with payroll taxes collected from workers and employers.
According to Bloomberg, trustees said the change in forecast was the result of the Tax Cuts and Jobs Act of 2017 and as a result, the expectation of lower payroll taxes.
Last year’s tax law, which also cuts taxes on Social Security benefits, helped exacerbate the shortfall. So did repeal of the individual mandate in the so-called Obamacare program, which promises to increase the number of people without health insurance and therefore Medicare payments for uncompensated medical care.
The report says Social Security will become insolvent in 2034 — no change from the projection last year.
Treasury Secretary Steven Mnuchin said in a statement that there’s time to fix the problems. “The programs remain secure,” Mnuchin said. Medicare “is on track to meet its obligations to beneficiaries well into the next decade.”
“However, certain long-term issues persist,” the statement added. “Lackluster economic growth in previous years, coupled with an aging population, has contributed to the projected shortages for both Social Security and Medicare.”
Social Security recipients are likely to see a cost of living increase of about 2.4 percent next year, said government number-crunchers who produced the report. That works out to about $31 a month.
Social Security and Medicare account for about 40 percent of government spending, excluding interest on the federal debt.
© 2021 Cox Media Group