WASHINGTON -- One of Medicare's trust funds will not be able to cover medical bills starting in 2026, three years earlier than expected, according to an annual federal report.
- Medicare trust fund to run out of money 3 years earlier than thought
- Federal report: Medicare trust fund to be insolvent by 2026
- Report says lower tax income, higher costs and spending to blame
- READ IT: 2018 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds (PDF)
Medicare, the program that provides health care for older Americans and those who are disabled, is covered by two big trust funds. Medicare trustees say the trust fund that covers Medicare Part A, which pays for hospital stays, home health services, nursing homes and hospice care, will run out of money sooner than expected.
Medicare Part A's trust fund is funded through payroll taxes, split between employer and employee.
The trust fund report attributes the funding drop to lower payroll taxes, caused by lowered wages in 2017, and lowered income from the taxation of Social Security benefits.
Costs to the fund will also be slightly higher than last year's estimates, "mostly due to higher-than-expected spending in 2017, legislation that increased hospital spending and higher Medicare Advantage payments," the trust fund report said.
Medical costs have long outpaced economic growth, and despite some slowdowns in cost over the past few years, that has not changed. The report by the trustees stressed that they've said before that the fund in trouble is not adequately financed over the next 10 years.
The board also thinks costs will increase at a fast pace in the future.
In 2017, Medicare covered 58.4 million people, with 49.5 million older than 65.
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. This is because premium income and general revenue income are reset each year to cover the expected rise in costs.
This does not mean the fund is safe. The report says that income still needs to increase faster than the economy to cover future growth.
This is a developing story. Check back for the latest.