Published: Sun, June 10, 2018
Health Care | By Cedric Leonard

Social Security COLA Could Top 3% in 2019

Social Security COLA Could Top 3% in 2019

Medicare's Hospital Insurance Trust Fund is expected to run out of funding three years earlier than expected, the program's trustees said in a report on Tuesday.

However, the total annual cost of the Old Age, Survivors and Disability Insurance Program (OASDI) program - what we generally refer to as "Social Security" - is projected to exceed total annual income in 2018 for the first time since 1982, and to remain higher throughout the 75-year projection period.

"The Part B and Part D accounts in the [Supplementary Medical Insurance] trust fund are expected to be adequately financed because premium income and general revenue income are reset each year to cover expected costs", the report stated.

Both numbers are expected to rise as the population ages making the financial health of both programs integral to Washington's future health as well. It will decline further to about 2.2 by 2035, when most baby boomers will have retired, officials said. Mnuchin is one of the trustees of Social Security and Medicare, a group that includes three Trump Cabinet officers and that released the annual report.

Two other Medicare funds - Part B, which covers doctor and outpatient visits and Part D, which covers prescription drugs - are reset each year based on projected costs.

Medicare spending as a percentage of gross domestic product totaled 3.7 percent in 2017, and the trustees project it will increase to at least 6.2 percent by 2092. The four top officials serve as the Social Security and Medicare trustees, along with two independent trustees who are supposed to represent the public. The public trustee posts are now unfilled.

Trump administration officials instead are counting on a strong economy to improve the solvency of Social Security and Medicare.

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Many Democrats, meanwhile, argue the problem is that the programs aren't generous enough.

But federal deficits keep rising, and the recent Republican tax-cut bill is only expected to add to the debt. The White House said the cuts would offset the initial drop in government revenue by spurring greater economic growth.

While recognizing that some "long-term issues" persist, US Treasury Secretary Steven Mnuchin said Tuesday that both programs remained "secure".

In principle, the U.S.is supposed to be paying forward its Social Security and Medicare obligations by building up trust funds to cover future costs.

Trustees said the trust fund for hospital expenses is not sufficiently financed over the next decade.

House Speaker Paul Ryan, R-Wis., has always been an advocate for overhauling the programs, introducing a voucher-like system for Medicare and calling for partially privatizing Social Security.

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