Sinking Medicare Doesn’t Need More Weight

Tuesday, April 1, 2003

Page 7

AFFAIRS OF STATE (Column)

Sinking Medicare Doesn’t Need More Weight

By DAVID KLINE

The yearly reports from the Social Security and Medicare trustees are in, again reminding us that both programs are rapidly running out of money.

Social Security will go belly up in 2042—one year later than the trustees predicted last year—and Medicare will become insolvent in 2026—four years sooner than predicted 12 months ago—according to the reports.

If no changes are made, a boy born today will pay into the Social Security system until he is 39 years old to help other people retire, and then the program will run out of money and he’ll get nothing in his golden years. The same person will pay Medicare taxes until he is 23, at which point the program will fold because it will be out of money.

Really, there’s much more to it than that. The reports say these doomsday dates aren’t even the worst-case scenario. If people live longer than anticipated and a variety of economic factors go the wrong way — as the Democratic Party’s presidential candidates already claim they will — Social Security will run out of money in 2031 and Medicare will be insolvent by 2015, just 12 short years from now.

The estimates don’t factor in the potential impact of specific reforms, such as benefit reductions, payroll tax hikes or income tax cuts that could increase revenue by promoting job creation.

Nor do the estimates take into account the possible addition of a prescription drug benefit for all Medicare recipients.

There have been no reliable cost estimates for this benefit proposed by liberal activist groups, but clearly it would create massive new spending and would bring about Medicare’s demise even sooner than expected.

While the trustees avoid such political questions, instead focusing on their job of actuarial forecasting, they do warn the politicians that doing nothing is not a wise option.

The Social Security report says: “The projected trust fund deficits should be addressed in a timely way to allow for a gradual phasing in of the necessary changes and to provide advance notice to workers. The sooner adjustments are made the smaller and less abrupt they will have to be.”

Similarly, the Medicare report warns that solutions “can and must be found to ensure the financial integrity” of the system. “The sooner the solutions are enacted, the more flexible and gradual they can be,” the trustees note.

History shows that similar warnings from the trustees have been ignored in the past, but perhaps this is the year that they will be taken seriously. President Bush has been talking about major Social Security and Medicare reforms since he began his campaign for the presidency, and with his party enjoying a majority in both houses of Congress, the time seems ripe for turning the words into actions.

The 218-page Social Security report and 158-page Medicare report are available online by following the appropriate links at www.ssa.gov and www.cms.hhs.gov, respectively. The reports include more statistics than most readers will need, but buried within their pages are interesting tidbits, such as a note that Social Security received $1 million in income last year “from the sale of excess supplies and equipment.” How many minimum-wage workers would it take to generate that amount of money from payroll taxes?

— Capitol News Service