Published: Wed, June 06, 2018
Medical | By Johnnie Horton

Social Security must reduce benefits in 2034 if reforms aren't made


"The current trajectories in health spending are both unsustainable and unmatched by increases in quality", Alex M. Azar II, the secretary of health and human services and a trustee of Medicare and Social Security, said on Tuesday.

The report from program trustees says Medicare will become insolvent in 2026 - three years earlier than previously forecast.

Meanwhile, higher benefit payouts mean Social Security will have to dip into its almost $3 trillion trust fund for the first time since 1982 - and trustees warned the program would be insolvent by 2034.

The warning serves as a reminder of major issues left to languish while Washington plunges deeper into partisan strife.

The combined Social Security trust funds are slated to run dry in 2034, and that will force benefits to be cut more than 20 percent. Medicare provides health insurance for about 60 million people, most of whom are age 65 or older.

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

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Many Democrats, meanwhile, argue the problem is that the programs aren't generous enough. It's not just the growing number of beneficiaries with the baby boom generation moving into retirement.

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

While costs have exceeded net income since 2010, this is the first time in more than three decades that spending is expected to outweigh total income, by about $2 billion, meaning asset reserves will decline.

Democrats have for months asserted that Republicans would use the deficit - swollen by tax cuts - as "an excuse to cut Social Security and Medicare", in the words of Senator Chuck Schumer of NY, the Democratic leader. That leaves less maneuvering room for policymakers when the day of reckoning finally arrives for Social Security and Medicare.

The report says the other trust fund, which covers Medicare Parts B and D, is expected to be financed through the next 10 years and beyond.

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