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Latest Social Security Financial Report Comes as No Surprise
By
Michael A. Piekarz
Staff Writer
The
2008 Trustee Report on the financial health of Social Security and
Medicare contained no surprises, but critics contend that the analysis
of Medicare will be used to justify massive cuts to programs previously
proposed by the White House.
According to this year’s annual reports, Social Security showed some improvement
in its long-range financial outlook, but continuing deficits predict that Social
Security will have sufficient funding for an estimated 33 years.
Most of the long-term improvements to the financial outlook for Social Security
occurred in the latter half of the Trustees’ long-range projection period.
The improvement resulted from methodological changes for projecting certain aspects
of immigration.
As with last year’s report on the Social Security Trust Fund, payouts are
projected to exceed revenues from taxes by 2017. Also unchanged was the 2041
date for the Social Security Trust Fund depletion.
The Trustees’ report also stated that additional revenues of $ 4.3 trillion
over the next 75 years will be needed in order to pay all scheduled Social Security
benefits.
“Social Security is at a crossroads. We face enormous challenges to shore
up the system,” said Michael J. Astrue, commissioner of Social Security.
“I will continue to work with President Bush, Congress and our stakeholders
to develop policy solutions. I also look forward to working with the next administration,
since the challenges that face the Social Security system will undoubtedly require
a bipartisan and multi-year effort.”
One bright point in the Social Security Trustees’ report is the low cost
of Social Security administration. The $5.5 billion cost of plan administration
for 2007 was less than 1 percent of the $585 billion in benefit payments for
the calendar year. The Social Security Trust Fund also earned interest at an
effective rate of slightly over 5 percent.
The 2008 Medicare Trustees Report shows that the Medicare program fares badly
in comparison to Social Security. In addition to facing the same demographic
trends as Social Security, Medicare must cope with expected large increases in
healthcare costs. Medicare’s annual costs were three-quarters of Social
Security’s, but they are projected to surpass Social Security expenditures
in 2028.
Cash flow for the Medicare Hospital Insurance (HI) Trust Fund is projected to
be negative for 2008 and for all subsequent years. The HI Trust Fund is projected
to become insolvent in 2019, the same year as projected in the 2007 Report.
The Medicare Supplementary Medical Insurance (SMI) Trust Fund, which includes
Part B for outpatient services and the new Part D prescription drug benefit,
is financed in large part by general revenues as well as beneficiary premiums.
SMI expenditures are projected to increase rapidly, resulting in growing pressures
on future federal budgets and the economy as a whole.
The Medicare Trustees’ report spurred a call to action from Health and
Human Services Secretary Mike Leavitt and other Administration officials.
“We need to act quickly and effectively to address Medicare’s fiscal
health, including enacting the steps proposed in the president’s budget,
which would postpone the insolvency date of the Part A trust fund for 10 years,” said
Leavitt.
“Congress should also act immediately on the smart changes put forward
by the Administration after last year’s funding warning, which would allow
the program to be modernized and transformed.”
“Although Congress has never allowed a Medicare trust fund to become exhausted,
under the current payment structure, a person who is 54 years old today can not
be assured that Medicare hospital insurance benefits will be there when he or
she turns 65 and first becomes eligible for Medicare,” said Centers for
Medicare & Medicaid Services acting administrator Kerry Weems.
“That’s why we are already beginning to implement steps to make healthcare
services under Medicare as effective and efficient as possible for beneficiaries.”
Critics contend that this year’s reports do nothing more than confirm what
is already known about the health of Social Security and Medicare. Particular
criticism is directed towards the Medicare Trustees’ report and what are
viewed as subsidies paid to private Medicare insurers.
“This trustees’ report shows that Social Security is on track to
pay full benefits for more than three decades. But the challenges of skyrocketing
healthcare costs are threatening not just seniors in Medicare, but Americans
nationwide,” said Barbara B. Kennelly, president/CEO of the National Committee
to Preserve Social Security and Medicare.
“No doubt, this annual report will have the sky-is-falling crowd calling
for ‘entitlement reform’ again while they continue to ignore America’s
healthcare crisis and fight to protect billions in insurance industry subsidies
which steal years of solvency from the Medicare program,” continued Kennelly.
According to Kennelly, the 2008 reports include a Medicare funding warning designed
to trigger massive and arbitrary program cuts like those proposed by the president
this year.
“Mandating Medicare cuts based on an arbitrary funding level hurts beneficiaries,
ignores the larger issue of skyrocketing healthcare costs, and will ultimately
destroy this vital program just when our nation needs it most,” she concluded.
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Metropolitan News Company, Inc.
