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WASHINGTON (MarketWatch) — Medicare’s finances got an upgrade on Friday but the long-term prognosis for Social Security stayed the same, in the latest snapshots of the politically sensitive entitlement programs that are certain to play into Washington’s coming fiscal battles.




Trustees for the Medicare program said its hospital insurance fund would be exhausted in 2026, two years later than was estimated a year ago. Social Security’s reserves, meanwhile, will run out by 2033, a projection unchanged from last year.




While the Medicare report paints a slightly healthier picture for that program, neither report will likely do much to quell a partisan debate about entitlements and overall government spending.




That debate will ramp up this fall, when Congress and the Obama administration face a deadline for raising the U.S. debt ceiling. Another flashpoint will be government funding for the next fiscal year. House Republicans and Senate Democrats have each passed budget blueprints, but they differ vastly in approaches to taxes and spending.




“These programs face long-term challenges,” Treasury Secretary Jacob Lew said in a statement. “Social Security and Medicare represent a fundamental obligation we have as a country to provide income and health care security for our fellow citizens.”




Trustees said the improvement for Medicare’s fund was due, among other things, to lower projected hospital insurance spending, especially for skilled nursing facilities.




The trustees also said President Barack Obama’s health-care law extended the life of the Medicare fund by reducing costs, something Lew highlighted in his statement. Republicans have tried to repeal the law, most recently in mid-May. Read earlier story.




The better picture for Medicare’s trust fund means that benefits wouldn’t have to be reduced as quickly as previously thought. If the trust funds for either program are exhausted, benefits are cut, but not stopped altogether. Read Medicare report.




In their annual report, the trustees who oversee Social Security’s two trust funds said reserves for the fund that pays disability benefits would be exhausted by 2016. Combined with the fund that pays benefits to retirees, all Social Security reserves would be exhausted by 2033. Read Social Security report.




Republicans have demanded cuts to retirement programs, something that could factor strongly into negotiations this fall over raising the U.S. debt limit.




For his part, Obama offered in his most recent budget to shrink the growth of Social Security benefits as part of a bigger deal to cut the deficit. Republicans said that offer didn’t go far enough.




Other options for bolstering Social Security’s finances include raising the retirement age. The program pays retirement and disability benefits to 57 million Americans. Last month, the average monthly benefit was nearly $1,270.

 

Job cuts at record low, but workers aren’t happy. Republicans and Democrats differ vastly in their approaches to Medicare. House Budget Committee Chairman Paul Ryan, a Wisconsin Republican, has authored a Medicare overhaul that would allow seniors to choose between receiving subsidies to buy their own health insurance or stay in the traditional program.




Democrats say that Ryan’s so-called premium support program is a non-starter.




Obama’s fiscal 2014 budget would reduce the growth of Medicare and other health-program spending by about $400 billion over the next 10 years by asking wealthier Medicare beneficiaries to pay more, among other means.




Robert Schroeder/MarketWatch in Washington


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