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Social Security and Medicare Funds Face Insolvency, Report Finds

Medicare’s hospital insurance fund is expected to be depleted in 2026 — the same date that was projected a year ago.Credit...Rugile Kaladyte for The New York Times

WASHINGTON — The financial outlook for Medicare and Social Security, two of the nation’s most important social safety net programs, remains precarious, threatening to diminish retirement payments and increase health care costs for Americans in old age, the Trump administration said on Monday.

An annual government report on the status of the programs painted a dire portrait of their solvency that will saddle the United States with more debt at a time when the economy is starting to cool and taxes have just been cut.

According to the report, the cost of Social Security, the federal retirement program, will exceed its income in 2020 for the first time since 1982. The program’s reserve fund is projected to be depleted in 16 years, at which time recipients will get smaller payments than they are scheduled to receive if Congress does not act.

Meanwhile, Medicare’s hospital insurance fund is expected to be depleted in 2026 — the same date that was projected a year ago. At that point, doctors, hospitals and nursing homes would not receive their full compensation from the program and patients could face more of the financial burden.

“Lawmakers should address these financial challenges as soon as possible,” the trustees of the program wrote. “Taking action sooner rather than later will permit consideration of a broader range of solutions and provide more time to phase in changes so that the public has adequate time to prepare.”

Although the report presented a grim long-term outlook, it was something of a bright spot that Social Security’s reserves are not depleting more quickly. The program’s disability fund is now not expected to run out until 2052 — 20 years later than what was projected last year.

Government officials said during a news briefing before the release of the report that a strengthening economy and broader access to health care, as a result of the Affordable Care Act, are responsible for declining disability claims.

Some Republicans sought to take credit on Monday for the fact that the news was not worse while also calling for changes to the programs.

“Following historic reforms to America’s tax code, this strong economy has strengthened these important programs, but today’s reports remind us of a fact we have known for far too long: Medicare is going broke and Social Security is not solvent,” Representative Kevin Brady, Republican of Texas, said in a statement.

Democrats played down the need for significant changes to the programs, which they created and have sought to protect. They said cuts to benefits would be unacceptable after waves of tax cuts under President George W. Bush and President Trump.

Lawmakers have been struggling to come to grips with a solution for the country’s eroding entitlement programs, which have for years been at the center of a political tug of war between Republicans and Democrats.

Mr. Trump was initially resistant to calling for cuts to the programs, but his budget proposal last month did just that. The request, which is being ignored by Congress, proposed shaving $818 billion from projected spending on Medicare over 10 years. It also called for $26 billion less on Social Security programs, including a $10 billion cut to Social Security Disability Insurance, which provides benefits to disabled workers.

Fiscal watchdog groups said on Monday that the new figures underscored the need for changes to the programs.

“That fact that we now can’t guarantee full benefits to current retirees is completely unacceptable, and it should be cause enough for every policymaker to rally around solutions to restore solvency to those programs,” said Maya MacGuineas, the president of the Committee for a Responsible Federal Budget. “Certainly we should be focused on saving Social Security and Medicare before we start promising to expand these programs.”

She added that “now isn’t the time for partisan bickering — we need solutions.”

That appears unlikely in the near term. The weight of Social Security and Medicare on the economy is projected only to grow.

Next year, the combined cost of the programs is projected to be 8.7 percent of the gross domestic product. By 2035, that will jump to 11.6 percent.

A version of this article appears in print on  , Section B, Page 3 of the New York edition with the headline: Insolvency Looms for Social Safety Net. Order Reprints | Today’s Paper | Subscribe

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