Financial Condition of Medicare and Social Security Deteriorating According to New Projections

An article from the NY Times reports that new projections put out by the administration has Medicare exhausting its funds by 2017 and the Social Security fund will be exhausted by 2037. The dates are 2 years and 4 years earlier than projected one year ago, respectively.

The article points toward the current economic status as a cause for the earlier dates of insolvency. With more workers laid off, the government has less payroll taxes to work with. These taxes are a major resource of funds for both of the programs.

In an earlier blog post we talked about Social Security and the lack of a cost of living adjustment (COLA) in the coming years. The NY Times article states the following about COLA and how it will affect Medicare:

The trustees said that one-fourth of Medicare beneficiaries would face sharply higher premiums: about $104 next year and $120 in 2011. This group includes new Medicare beneficiaries…Seventy-five percent of beneficiaries will not pay any increase, so the remaining 25 percent have to pay more to keep the trust fund at the same level, Medicare officials said.