Medicare, Social Security still face shortfalls

The trust fund used to pay hospital insurance costs for Medicare will be wiped out two years earlier than expected, according to a government report released Wednesday.

The report also showed that the Social Security trust fund has enough cash to pay full benefits for another 18 years, the same timeline as last year, the Treasury Department said Wednesday. In the latest annual check-up on the two largest entitlement programs, the trustees overseeing both Social Security and Medicare said additional reforms are needed in order to avoid cutting health care and retirement benefits for American retirees.

“Social Security and Medicare remain secure in the medium-term,” said Treasury Secretary Jack Lew.

The fund for Medicare is on track to run out of money by 2028, which is earlier than expected from last year but still 11 years later than projected before the Affordable Care Act was implemented. After the fund is depleted, the program will only have enough tax revenue to pay out 87 percent of hospital costs, projections show. Financing for the program suffered last year because of a drop in tax revenue and an increase in spending for inpatient hospital services.

In one bright spot of the report, the fund used to pay benefits for people with disabilities — which was set to run out of funds by the end of this year — should last at least through 2023. Congress made changes last year that directed more cash to that part of the program by reallocating money from the trust fund used to pay benefits to retirees and survivors.

Although the forecasts have not budged that much from last year, efforts are still needed to prolong the life of these funds. Despite those challenges with the long-term financing of the program, President Obama and other Democrats, including presidential candidates Hillary Clinton and Sen. Bernie Sanders, have recently called for Social Security to be expanded.