According to the annual report released May 1, the Medicare trust fund will
be depleted by 2018, two years sooner than predicted a year ago and 12
years sooner than anticipated when President Bush took office. So warns a
"News of the Day ... In Perspective" release on May 6, 2006 from the
Association of American Physicians and Surgeons, Inc.
The Medicare and Social Security programs "form the basis of a looming
fiscal crisis for our nation as the baby-boom generation moves into
retirement," said Treasury Secretary John W. Snow, one of the trustees.
Senators Charles Grassley (R-IA) and Max Baucus (D-MT) called for the
resignation of public trustees Tom Saving and John Palmer, reappointed by
President Bush during Easter recess to avoid the need for Senate
confirmation (Wash Post 5/2/06).
Saving and Palmer are credited with changing the Trustees report to include
annual updates on the value of the unfunded liabilities.
This year, the combined Social Security/Medicare unfunded obligations
reached $36.7 trillion on a 75-year horizon and $83.9 trillion on an
infinite horizon. These figures were not included in handouts provided
during a briefing on the report, according to John Goodman of the National
Center for Policy Analysis.
The Trustees also reported that in 2006, 12.3% of federal income tax
revenues will be transferred to support Medicare; Social Security still has
an excess amounting to 5.3% of income tax revenue. If present trends were
to continue, Medicare alone would absorb 74.8% of income tax revenue by
2080, and Social Security 17.0%.
As part of the Medicare Modernization Act, the Trustees are required to
compare overall projected Medicare expenditures with the program's
"dedicated revenues." If the difference is projected to exceed 45% of the
revenues within the first seven years of the projection period, it triggers
a determination of "excess general revenue Medicare funding." A second such
determination in 2007 would trigger a "Medicare funding warning."
This year is the first to trigger the determination. If it occurs again
next year, Congress will be required to consider action on a expedited
basis, but won't actually have to do anything.
The provision was intended to cap the amount of general revenues that could
be used to support Medicare. According to a New York Times May 4 editorial,
such a cap is "a perverse way to deal with Medicare's very real financial
problems," because it "removes the most progressive source of funding from
further consideration."
President Bush proposes to create a federal commission on the plight of
entitlement programs and to slow Medicare spending by $36 billion over the
next five years.
Comments Jane Orient, M.D. Executive Director of AAPS, "If the hospital
"trust fund" for our single-payer Medicare program for the elderly is going
to be insolvent by 2018, and is slated to devour most of the federal
treasury soon thereafter, how can we possibly fund universal single-payer
health insurance for everybody?
We've reached the conclusion that the United States is now like an
individual or business that has gone so deeply into debt, it knows the
money will never be repaid. So why bother being responsible anymore? Just
let the final collapse come after our time, and let the decline be gradual.
Unfortunately, the decline won't be gradual, and when it comes will be like
falling off a cliff. And our indebtedness for medical care is just giving
the rest of the world more weapons to use against us.
