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Medicare faces an immediate funding challenge. Social Security? A remedy can be gradually administered
Published on Thursday, May 14, 2009
So, yes, the recession matters, but there are more telling factors, especially for Medicare, the health-care program for older Americans, which faces the more immediate and severe financial challenge.
On Tuesday, the Obama White House projected the Medicare fund that pays hospital bills will run out of money in 2017, two years sooner than estimated a year ago. In the coming decade, the number of Medicare beneficiaries will increase from the current 45 million to almost 60 million. Most decisive to the accelerating financial strain? The overall increase in health-care costs combined with the greater use of medical care, the many procedures and technologies newly and readily available.
With that in mind, President Obama stepped up the pressure for repairing the health-care system. He asserted ''the star are aligned,'' adding: ''We've got to get it done this year. . . . We don't have any excuses.'' Slow the growth in health-care costs, and Medicare will improve its financial position.
What Congress shouldn't overlook is that there are changes to Medicare alone that would reap savings, roughly $266 billion a year during the next decade. The president, following the lead of the Medicare Payment Advisory Commission, has proposed ending overpayments to private insurers participating in Medicare. As it is, Medicare pays private insurers 14 percent more on average to cover beneficiaries than it would cost under the traditional program.
If urgency is warranted concerning Medicare, the problems involving Social Security allow for time in implementing a response. The White House reported that Social Security will exhaust its ability to pay full benefits in 2037, or four years earlier than projected a year ago. Worth noting is that the date hardly deviates from earlier projections; in 2000, depletion predicted for the same year; in the 1990s, forecasts pointing to earlier dates.
More, as Robert Greenstein of the Center on Budget and Policy Priorities explains, the estimated size of the Social Security shortfall during the next 75 years amounts to less than 1 percent of the overall size of the economy, or 2 percent of the projected taxable payroll. So, gradually adjust the retirement age, or means-test benefits or take other steps to bolster the larger financial position of the country, and Social Security will likely remain on solid ground.
At the same time, the sooner the country acts, the less burdensome the remedy will be.
Again, Medicare doesn't allow for such time, the president rightly stressing the need to act quickly to address flaws in health care. The White House predicts that Medicare spending will exceed the growth in workers' earnings and the economy as a whole. Slowing the pace won't be easy. Beyond the legislative combat of crafting change, comes the need to pay more (in taxes) or reduce services and benefits.
Get the full article here.
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