Tax cuts, cost increases to drain trust fund faster than previously expected.
Medicare's financial condition has taken a turn for the worse because of predicted higher hospital spending and lower tax revenues that fund the program, the federal government reported Tuesday.
In its annual report to Congress, the Medicare board of trustees said the program's hospital insurance trust fund could run out of money by 2026 -- three years earlier than projected last year.
A senior government official briefing reporters attributed the worsened outlook for Medicare to several factors that are reducing funding and increasing spending.
He said the trustees projected lower wages for several years, which will mean lower payroll taxes, which help fund the program. The recent tax cut passed by Congress would also result in fewer Social Security taxes paid into the hospital trust fund, as some higher-income seniors pay taxes on their Social Security benefits.
The aging population is also putting pressure on the program's finances.
In addition, he said moves by the Trump administration and the GOP-controlled Congress to kill two provisions of the Affordable Care Act are also harming Medicare's future. Those were the repeal of the penalties for people who don't have insurance and the repeal of an independent board charged with reining in spending if certain financial targets were reached.