Treasury officials admitted that Congress's recent tax cuts had led to lower projected revenue for the program. But Treasury Secretary Steve Mnuchin said greater economic growth would ensure long-term solvency.
The United States' largest publicly funded medical insurance program will run out of money sooner than expected, according to an official projection released on Tuesday.
The trust fund for Medicare is set to become insolvent in 2026 — three years earlier than last year's official projection. The program provides health insurance to some 60 million people, most of whom are over 65 years old.
The country's main welfare program for retirees, Social Security, also faces an uncertain future.
A separate projection released on Tuesday showed it will become insolvent in 2034 — the same estimate as last year. Some 45 million retirees and six million dependents receive Social Security benefits.
'Programs remain secure'
US Treasury Secretary Steven Mnuchin, who also serves as a trustee for both programs, admitted there were "long-term issues," but dismissed concerns about the programs' future solvency.
"The programs remain secure," he said, adding: "The administration's economic agenda — tax cuts, regulatory reform, and improved trade agreements — will generate the long-term growth needed to help secure these programs and lead them to a more stable path."
Tuesday's projections are the first since the US Congress passed major tax cuts championed by President Donald Trump in December. The White House said the cuts would offset the initial drop in government revenue by spurring greater economic growth.
But speaking to reporters on Tuesday, Treasury officials said the cuts were set to decrease revenues for both programs.
Of the two programs, Medicare faces the greatest fiscal challenges as medical costs increase and the US ages, with many baby boomers set to retire in the next several years.
The White House is required by law to tell Congress about how it will ensure Medicare's long-term solvency if official projections show a worsening in the program's long-term financing.
Excluding federal debt payments, Medicare and Social Security together make up about 40 percent of total US government spending.
amp/se (AFP, AP)