Medicare and Social Security together accounted for 41 percent of federal costs in 2013. But neither Medicare nor Social Security can carry on with their current financial schedules and legislative changes must be addressed, according to an annual report released Monday by the Social Security and Medicare Boards of Trustees.
The trustees predict the Medicare Hospital Insurance (HI) Trust Fund will face depletion by 2030. In last year's report, the trustees said Medicare would operate financially unimpaired until 2026. By 2030, funds will only cover 85 percent of HI costs.
The four-year extension for Medicare solvency is thanks, in part, to lower-than-expected spending in 2013.
For Medicare Part B of Supplementary Medical Insurance, physician payment rates will likely keep steady through the end of 2015, but will then rise through 2023. However, Part B and Part D will remain financed because current law provides funds to meet next year's expected costs for both programs.
Because of rising healthcare costs and baby boomers facing retirement, the trustees expect total Medicare costs to grow from 3.5 percent of gross domestic product in 2013 to 5.3 percent of gross domestic product (GDP) in 2035. By 2088, it will rise to 6.9 percent.
Meanwhile, the Social Security's Disability Insurance program's trust fund dropped to 62 percent at the beginning of 2014--the trustees anticipate full depletion of funds by late 2016. Since its peak in 2003, the trust fund ratio has steadily declined.
The trustees anticipate that Social Security cost will exceed noninterest income throughout the 75-year projection period. And the deficit is expected to average $77 billion between 2014 and 2018, the report mentions.
For more:
- here's the full report