Report: Insolvency for Medicare and Social Security Draws Ever Closer

May 12, 2009

(ChattahBox) — Medicare’s trustees warned today in a sobering report, that the program’s biggest fund would run out of money in just eight years, underscoring the urgency of the current push in Washington to rein in skyrocketing healthcare costs.   The projection issued in an annual report from the programs’ trustees, says that Medicare’s hospital insurance trust fund will be exhausted in 2017.   That is two years earlier than the date projected in last year’s report.    Health and Human Services Secretary Kathleen Sebelius said Medicare’s problems prove the need for a national health care plan. “This report makes it clear,” she said. “Reform can’t wait.” 

The report also said that the Social Security annual surplus would be eliminated entirely in 2016, reflecting increased demands from the wave of 78 million baby boomers retiring. Social Security’s reserves now face depletion in 2037, four years sooner than the previous projection of 2041. The projections assume that there are no changes in current benefits, policies and tax rates.  On a 75-year horizon, Social Security would need additional revenue equivalent to $5.3 trillion in today’s dollars to pay all scheduled benefits. However with the current recession, millions fewer people are working and paying the taxes that support the programs; meanwhile health care costs are continuing to soar, people are living longer and millions of baby boomers have begun receiving Social Security retirement benefits.  Treasury Secretary Tim Geithner said both programs can be stabilized by revived economic growth and fiscal reform, especially health care cost saving that can bolster Medicare.


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