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Predictions for Medicare and Social Security no Brighter than Last Year
According to Social Security and Medicare Board of
Trustees’ financial review of the programs, Medicare’s
hospital-insurance trust fund will be used up by 2019 if no
changes are made to the program, and Social Security is
projected to exhaust its funding in 2041 if no changes are
made.
The Medicare program faces tougher challenges than Social
Security due to rising health care costs, according to the
report. At the point where the funds run out, existing
law would require the entitlement program, which serves the
elderly and some disabled beneficiaries, to slash benefits
across the board. The program already has a negative cash
flow in its trust fund, which is also filled by payroll
taxes.
Treasury Secretary Henry Paulson said in a
statement
that the report underscored the need to address
fiscal pressures facing both programs as the Baby Boom
generation prepares for retirement. “The longer we delay,
the larger the required adjustments will be – and the
burden of making those adjustments will fall more heavily
on future generations,” he said.
The Social Security program is now running at a surplus and
is funded by a payroll tax of 12.4% split between employers
and employees on income up to $97,500. As the baby boomer
generation begins retiring in droves, the Social Security
fund is forecasted to start outstripping its revenues by
2017, according to the report.
For a summary of both the Medicare and Social Security
report go
here
.
For the full Medicare report go here .
For the full Social Security report go here .