Trustees who monitor the pivotal programs said Medicare is now paying out more than it receives and that Social Security will start paying out more in benefits than it collects in taxes in 2016, one year sooner than projected last year. The giant trust fund will be depleted by 2037, four years sooner than earlier projections.
On Medicare, the trustees found the government-funded program for hospital expenses will pay out more in benefits than it collects this year and will be insolvent by 2017, two years earlier than the date projected in last year’s report, according to the Associated Press.
“The Medicare program’s financial challenges are larger and more imminent than those of Social Security,” a Treasury Department press release on the programs stated. “Medicare faces demographic challenges, rapidly growing health care costs and the short-term outlook has been hurt by the recession.”
Treasury Secretary Timothy Geithner, the head of the trustees group, said the new reports were a reminder that “the longer we wait to address the long-term solvency of Medicare and Social Security, the sooner those challenges will be upon us and the harder the options will be.”
The Congressional Budget Office recently projected that Social Security will collect just $3 billion more in 2010 than it will pay out in benefits. A year ago, the CBO had projected that Social Security would have a much higher $86 billion cash surplus for the 2010 budget year, which begins Oct. 1.
The trustees report is likely to set off fresh discussions over the future of Social Security and Medicare — and comes as President Barack Obama is renewing his push for broad health care reform legislation that would help cover the estimated 46 million Americans who lack medical insurance.
The reports, which are the annual checkups given the two benefit programs, also offers a reflection of the nation’s unemployment woes as fewer workers have been paying into the two systems. The unemployment rate hit a 25-year high of 8.9 percent in April.