The Trustees of the Social Security and Medicare trust funds have released their annual report summarizing the financial situations of both Medicare and Social Security. The 2009 report demonstrates that both the Social Security and Medicare programs remain in challenging financial situations as costs are not sustainable given the current program parameters.
Social Security's annual surpluses of tax income over expenditures are expected to fall significantly this year and to remain steady in 2010 due to the recession. They are expected to rise for a brief period before declining again. Cash flow deficits are projected beginning in 2016 as baby boomers become beneficiaries. The deficits will be alleviated by redeeming trust fund assets until reserves are exhausted (projected in 2037), at which point tax income would be sufficient to pay about three fourths of scheduled benefits through 2083.
Medicare's financial status is worse, and will become a problem before Social Security, as its problem is exacerbated by the rising costs of health care. In 2008 and again in 2009, Medicare's Hospital Insurance (HI) Trust Fund will pay out more in hospital benefits and other expenditures than it receives in taxes and other dedicated revenues. The difference will be addressed by redeeming trust fund assets. Growing annual deficits are projected to exhaust HI reserves in 2017, after which the percentage of scheduled benefits payable from tax income would decline from 81 percent in 2017 to about 50 percent in 2035 and 30 percent in 2080. In addition, the Medicare Supplementary Medical Insurance (SMI) Trust Fund that pays provider fees and prescription drug costs will continue to require increases in costs for beneficiaries and the Federal government.
The Trustee reports concluded that both programs are facing serious financial challenges that need to be addressed quickly. Secretary Sebelius’ statement reads “this isn’t just another government report. It’s a wake up call for everyone who is concerned about Medicare and the health of our economy. And it’s yet another sign that we can’t wait for real, comprehensive health reform.”
The 2009 Trustees are:
Timothy F. Geithner, Secretary of the Treasury
Hilda L. Solis, Secretary of Labor
Kathleen Sebelius, Secretary of Health and Human Services
Michael J. Astrue, Commissioner of Social Security
There are two other currently vacant Trustee positions that are public representatives appointed by the President, subject to confirmation by the Senate.
To view a summary of the reports:
http://www.socialsecurity.gov/OACT/TRSUM/index.html
To view Secretary Sebelius’ statement on the reports:
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