A Medicare Trustees report released Tuesday finds that Medicare’s trust fund will be depleted in 2026, three years earlier than last year’s report found.
“The Trustees recommend that Congress and the executive branch work closely together with a sense of urgency to address the depletion of the [trust fund] and the projected growth [in spending],” the trustees report states. ”
“Consideration of further reforms should occur in the near future,” it continues. “The sooner solutions are enacted, the more flexible and gradual they can be.”
The trust fund covers costs in Medicare Part A, which covers hospital care. Care in Medicare Part B, which covers doctor visits, has a separate source of funding, collected through premiums.
The Social Security Trust Fund is projected to remain solvent until 2034, no change from last year’s projection.
Treasury Secretary Steve Mnuchin said in a statement Tuesday that both Medicare and Social Security “remain secure,” though he noted long-term challenges. “However, certain long-term issues persist,” he said. “Lackluster economic growth in previous years, coupled with an aging population, has contributed to the projected shortages for both Social Security and Medicare.”
He argued that the administration’s agenda of tax cuts and regulatory reform will lead to the growth needed to secure the programs.
President Trump emphasized during the campaign that he would not cut Social Security or Medicare, a break from proposals from other Republicans like Speaker Paul Ryan (R-WI), who have called for overhauling the program to save money. Those ideas have been sharply denounced by Democrats as leading to harmful cuts.
Congress did take bipartisan action earlier this year to repeal a Medicare cost-cutting board known as the Independent Payment Advisory Board. That was set up under ObamaCare and had drawn opposition from both parties. Critics said it gave too much power to bureaucrats to cut Medicare costs. Its elimination, though, removes one avenue for cutting Medicare spending.
One factor the report cited is the repeal of the individual mandate in the GOP tax law last year. More uninsured people resulting from that move means Medicare will make more payments to hospitals for care for the uninsured.
Overall, the report should draw policymakers’ attention, said Juliette Cubanski, a Medicare expert at the Kaiser Family Foundation. But she noted that depletion of the trust fund does not mean Medicare will cease to operate; it just would not be able to cover 100 percent of its costs. In 2026, the report projects Medicare would be able to cover 91 percent of its costs, for example.