Washington – The financial troubles afflicting the Medicare system have deepened during the past year, according to a government forecast that says the federal fund that pays for hospital care for older Americans will become unable to cover all its bills a dozen years from now.
The annual report, issued Monday by the trustees who monitor the fiscal health of the Medicare and Social Security programs, said the trust fund for the health insurance system for the elderly will run out of money in 2018 – two years sooner than predicted a year ago and 12 years sooner than had been anticipated when President Bush first took office.
The problem, the report says, has accelerated largely because hospital costs last year were greater than expected.
The forecast also said Social Security’s financial condition has weakened, although its problems are not as large or urgent. The report said the retirement system will have enough cash to pay the benefits it owes retirees, disabled workers and workers’ survivors until 2040 – one year less than expected in the 2005 forecast.
In releasing the report, the trustees – including three of Bush’s Cabinet secretaries – slightly altered the message accompanying the forecast the past few years, when the administration sought to use the predictions as leverage to persuade a reluctant Congress to embrace the president’s goal of letting Americans divert some of their payroll taxes into individual retirement accounts. That emphasis prompted Democrats and other critics to chastise the administration for dwelling on Social Security while Medicare’s problems were more acute.
On Monday, the president’s aides – and Bush – drew attention equally to the frailty of the two largest benefits programs that form the twin pillars of the government’s assistance to the elderly. The solution, they said, was for Congress to approve changes Bush already has proposed.
Treasury Secretary John Snow, one of the trustees, said the programs “form the basis of a looming fiscal crisis for our nation as the baby-boom generation moves into retirement.”
“The systems are going broke,” Bush said in a health care speech earlier in the day. “And now is the time to do something about it.”
Administration officials portrayed the report as containing some bright news, because spending on the new Medicare prescription drug benefits – from general revenue, not the same trust fund as hospital bills – appears lower than once thought.
However, two independent trustees had a different explanation: Fewer Medicare patients are signing up for the drug benefits than anticipated last year.
