Medicare to Go Broke by 2019, Trustees Predict

Discussion in 'Economics' started by omcate, Mar 23, 2004.

  1. omcate



    Published: March 23, 2004

    Filed at 5:16 p.m. ET

    WASHINGTON (AP) -- Medicare will have to begin dipping into its trust fund this year to keep up with expenditures and will go broke by 2019 without changes in a program that is swelling because of rising health costs, trustees reported Tuesday.

    Social Security's finances showed little change, and its projected insolvency date remained 2042.

    The deteriorating financial picture for the health care program for older and disabled Americans is a result, in part, of the new Medicare prescription drug law that will swell costs by more than $500 billion over 10 years, according to the annual report by government trustees.

    Provisions of the law that President Bush signed into law in December ``raise serious doubt about the sustainability of Medicare under current financing arrangements,'' the trustees said.

    The 2019 go-broke date for the Medicare trust fund, which is devoted primarily to paying beneficiaries' hospital bills, is seven years sooner than what the trustees projected last year.

    The trustees' report is the first official estimates of the long-term costs of the new Medicare law in December. As they did last year, the trustees said that projected lower tax receipts devoted to the program and higher expenditures for inpatient hospital care also contributed to the growing financial problem.

    White House spokesman Trent Duffy said the rising cost of health care -- and not the prescription drug program -- is causing Medicare costs to swell. ``It's health care costs -- over 70 percent,'' he said. ``Not prescription drugs.''

    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.

    The report quickly became presidential campaign fodder.

    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. ``We need a real plan to preserve and protect Medicare and bring fiscal responsibility back to the White House. It is time for change and I will deliver it.''

    The Bush-Cheney campaign, meanwhile, criticized Kerry who -- like many Democrats -- voted against the prescription drug benefit, complaining that it favored pharmaceutical companies and HMOs. Kerry, the campaign said, ``would bankrupt Medicare while denying seniors access to cost- and lifesaving prescription drugs and preventive care.''

    The trustees took the unusual step of estimating the shortfall for both Medicare and Social Security on an ``infinite horizon,'' instead of limiting their long-term projections to 75 years. The new approach, which would put the combined shortfall at $72 trillion, takes into account ``not only people who are participating today, but all future generations who will pay taxes and draw benefits,'' said a report co-authored last fall by Thomas Saving, a trustee who teaches economics at Texas A&M University.

    Several analysts and Democratic congressional aides said the longer timeframe was meant to create a sense of crisis by Republicans who want to reduce the government's role in the programs in favor of private, individual investments.

    Small differences in assumptions can produce major swings in projections, they said, pointing to the $139 billion difference over just 10 years in the estimated cost of the Medicare law between congressional budget analysts and Medicare's actuary.

    The trustees' report is based on the estimates by Medicare actuary Richard Foster.

    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.

    A big reason for an earlier insolvency date ``will be a direct result of increased payments to private health plans,'' said Terri Shaw, an analyst with the liberal Center for American Progress.

    Last year, Medicare's insolvency date was moved up to 2026 from 2030. The projected insolvency date for Social Security, on the other hand, was extended to 2042, one year later than what was forecast in 2002.

    The 2003 report also projected that Medicare will have to begin dipping into its trust fund in 2013 to keep up with expenditures.
  2. BSAM


    "They've" been predicting this since Neil Armstrong walked on the moon. (Well, as far back as I can remember anyways.) The same for Social Security. If this country EVER takes away the Medicare and SS benefits, America would cease to exist as we know it today. Economic chaos and collaspe would ensue. Milliions of older folks ABSOLUTELY DEPEND on these government programs. Besides, all we've got to do is cut back on a few of our wars and trips to Mars and then we can maintain Medicare, SS and provide healthcare for the citizens.....EASILY. The Democrats get into the White House every few years (as they will this year, but that's for a different thread). These are their pet programs that they'll never let go down. It's always one of their biggest plays against the Republicans. What I'm saying is: Don't Panic.
  3. Maybe tt wouldn't go broke if social budget hadn't been pumped by gov and thiefs:

    Clinton knowingly invented a "surplus budget" that was false because it was just a transfer from the retirement money to an other gov's budget (this doesn't remind you of corporates accused of frauds by the same gov because they were doing the same with accounting transfer ?), that then Bush "just" continues to exploit for making his war spending for the profit of Halliburton and carlyle group (main investors ... Ben Laden Family) so that surplus budget, which comes from retirement funds and that has never existed in truth has now been poured into the pocket of the thiefs. And this retirement budget that has been stolen, if you don't remember or know, has been created before by Greenspan who asked for doubling this social tax under the pretext that retirement will be a problem; of course it will be a problem if each time retirement money is just pumped out haha ! When the problem is created mostly by those who denounces it to even more profit from it...

    This was done with the complicity of nearly the whole Congress except a few that denounced the accounting fraud vainly. So you can count on them also for counterbalancing the gov's thiefs and defend people's money and taxes. Now if people weren't so dumb to ignore that debts = defered taxes in future, and the more it is defered the more heavy it will be so your children or little children risk to become slaves of gov. Everybody will have to work for gov because individual properties through tax pumping higher and higher at each generation will be just be erased at long term except for a very very few.
  4. Agree harrytrader, and if us tax laws werent written so our usa corps can keep estimated 600 billion outside usa so they wont have to pay taxes on them we might get some additional tax revenue to pay some of these debts. Kerry wants to tax them 10% to repatriate the funds but only some corps will elect to do that since now there paying 8% or less in other nations. Usa corps pay 4% of all taxes paid in usa which is neglible. They say well we have to compete globally well lets pull our troops from around the globe back to good ol usa and let the corps defend there interest in these nations. Who keeps the persian gulf lanes free of problems so china can get there oil? Stop planting our troops all over the globe like trees and let the corps defend there properties. Lets see how long globalization last when a few nations sieze some factories. Heck we still have issues with cuba because they siezed casinos, sugar crops etc.. If usa corps want there properties unmolested then let them build it here, otherwise they get what they get.
  5. >all we've got to do is cut back on a few of our wars and trips to Mars

    WE ? :D There IS the problem: you confuse WE whereas you should say THE BUREAUCRATS. As Milton Friedman said:

    "You know, people have the image, have the idea, that somehow "we the people" are speaking through the government. That is nonsense."

    Here's his interview at federal reserve of Mineapolis where he said that:

    Friedman: One unsolved economic problem of the day is how to get rid of the Federal Reserve. The most unresolved problem of the day is precisely the problem that concerned the founders of this nation: how to limit the scope and power of government. Tyranny, restrictions on human freedom, come primarily from governmental institutions that we ourselves set up.

    Abraham Lincoln talked about a government of the people, by the people, for the people. Today, we have a government of the people, by the bureaucrats, for the bureaucrats, including in the bureaucrats the elected members of Congress because that has become a bureaucracy too.

    And so undoubtedly the most urgent problem today is how to find some mechanism for restructuring our political system so as to limit the extent to which it can control our individual lives. You know, people have the image, have the idea, that somehow "we the people" are speaking through the government. That is nonsense.