WASHINGTON--For the third year in a row, its trustees are warning that, unless Medicare makes some major changes, the program's Part A hospital fund will soon be singing its swan song.
In the recent release of the long-term financial reports for Social Security and Medicare, trustees said the outlook for both programs remains grim, and, with a Medicare funding warning now in place for the third year in a row, advisors say the next president must propose legislation to cut the share of Medicare costs borne by the government.
“As the baby boom generation moves into retirement, these programs face progressively larger financial challenges,” said Treasury Secretary Henry M. Paulson Jr., one of the trustees, in press reports. “If we do not take action soon to reform Social Security and Medicare, the coming demographic bulge will jeopardize the ability of these programs to support people who depend on them.”
In their report, the trustees said Social Security's trust fund will become insolvent by 2041, while Medicare's hospital insurance trust fund will be out of money by 2019. Both dates are the same as those predicted last year.
Each year, the trustees' report stirs debate on Social Security and Medicare reform, but, as the choices lawmakers face to save the programs--benefit cuts, higher payroll taxes, higher premiums for seniors--are unpopular, any action has been tabled.
This year, President Bush sent Congress a proposal to cut the programs, but Democrats who control both chambers are expected to ignore his legislation. Still, lawmakers might select some provisions from the proposal to curb Medicare spending--including cuts to oxygen and power wheelchairs--and include them in the Medicare bill that Senate Finance Committee Chair Max Baucus, D-Mont., is expected to introduce in July.
“Working to make payment systems across Medicare more accurate and reasonable, coupled with systemic reforms to increase quality and slow the growth of costs, will be necessary to fix what ails this vital program,” Baucus said in a March 25 statement.