Medicare could go broke by 2019
WASHINGTON (AP) — Medicare will go broke by 2019 without changes, 11 years sooner than its trustees projected two years ago — a deterioration the White House blames on rising health care costs, but that Democrats attribute to failed economic policies.
The government health care program for older and disabled Americans will have to take $7.5 billion from its reserves this year to meet its expenses, government trustees said Tuesday in their annual report.
Social Security’s finances, by contrast, remained the same and the program’s projected insolvency date remained 2042, the trustees said. A projected $3.7 trillion shortfall over 75 years could be erased with a 15 percent increase in Social Security taxes, a 13 percent cut in benefits or some combination of a tax hike and benefit reduction, they said.
Medicare probably will require more substantial changes, they said. As recently as 2002, Medicare’s projected insolvency date was 2030 and trustees said the program wouldn’t need to tap its reserves until 2016. Last year, trustees advanced the dates to 2026 and 2013, respectively.
The six trustees — four of whom are senior Bush administration officials — said that projected lower tax receipts devoted to the program and higher expenditures for hospital care have contributed to the growing financial problem for two years in a row.
In addition, aspects of the new Medicare prescription drug law signed by President Bush in December also will drain the program’s trust fund, devoted primarily to paying beneficiaries’ hospital bills.
The trustees painted a picture of an unsustainable program that over 75 years would require an additional $27.7 trillion unless Congress makes unspecified changes.
The prescription drug benefit that begins in 2006 and other changes will swell program costs by more than $500 billion over 10 years and more than $8 trillion over 75 years, according to the report.
The new numbers provided fuel for an already hot political debate in which both parties are courting graying baby boomers in this year’s elections for control of the White House and Congress.
Democrats said the lack of new jobs in the economy is responsible for lower receipts from wage taxes. Democratic candidate John Kerry blamed “George Bush’s irresponsible tax breaks for the wealthy and his giveaway to the prescription drug companies” and said the system would be broke by the time people 50 or younger reach retirement.
“After inheriting a strong economy and record surpluses, this president had the chance to stay the course of fiscal responsibility and shore up both the Social Security and Medicare trust funds. Instead, he made a mockery of fiscal responsibility,” Kerry said.
The Bush-Cheney campaign, meanwhile, criticized Kerry who — like many Democrats — voted against the prescription drug benefit. Kerry, the campaign said, “would bankrupt Medicare while denying seniors access to cost- and life-saving prescription drugs and preventive care.”
Republicans said the new numbers offered more evidence that they need to curb costs, including through competition between traditional Medicare and private insurance plans.
Republicans pressed for the overhaul of Medicare last year to give private insurers a much larger role in the program as a way, Bush and others said, to control long-term costs.
But the government’s own projections are that private managed care plans will cost taxpayers more than traditional Medicare for the foreseeable future.
Government officials have been predicting for years that the retirement insurance and health care funds for the elderly — both financed through payroll taxes — will be pushed toward insolvency as more post-World War II baby boomers reach 65.
By 2078, the trustees said, the gap between revenues and spending would be $31.4 trillion for the two programs. Looking even further into the future, the trustees said the gap would be $72 trillion.
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On the Net:
Social Security Administration: http://www.ssa.gov
Medicare: http://www.medicare.gov