New York Times
POSTED: 7:05 p.m. HST, Jul 28, 2014
LAST UPDATED: 4:18 a.m. HST, Jul 29, 2014
WASHINGTON >> Medicare's financial condition improved significantly in the last year, thanks in part to the Affordable Care Act, but the outlook for Social Security is basically unchanged, the Obama administration said Monday.
If Congress makes no change in existing law, officials said, Medicare's hospital insurance trust fund will be exhausted in 2030, four years later than the administration projected in May 2013. The Social Security trust fund, they said, will be depleted in 2033, the same as expected last year.
The forecasts were included in the government's annual report on the two programs, which together account for about 40 percent of federal spending.
Medicare spending on hospital care was lower than expected last year, the administration said, and officials have lowered their assumptions about the use of inpatient hospital services in the future.
Reports from the trustees -- four federal officials and two public representatives -- are largely prepared by career civil servants, who take pains to provide an objective assessment of the programs' finances.
Social Security provides benefits to 59 million people, and, on average, about 10,000 baby boomers become eligible each day. Payroll taxes and other revenue dedicated to Social Security would be sufficient to pay about three-fourths of promised benefits if its trust fund runs out, administration officials said.
Treasury Secretary Jacob J. Lew said the reports showed that "Social Security and Medicare are fundamentally secure." But he expressed concern about Social Security's disability program because, he said, its dedicated funds will cover the full amount of promised benefits for only two more years.
Lew endorsed a stopgap solution, which would temporarily reallocate some payroll tax revenue to disability benefits from the surplus built up for retirement benefits. "There is probably no other alternative that could provide the desired results" in the next two years, Lew said. Congress approved a similar reallocation in the 1990s.
With the aging of the population, the number of Medicare beneficiaries is also growing rapidly.
The financial condition of Medicare has benefited from a slowdown in national health spending, attributed in part to the Affordable Care Act, which curbed Medicare payments to many health care providers and encouraged them to find more efficient ways of delivering care. Slow growth of wages and prices, following the economic recession of 2007-09, was also cited by the trustees as a factor restraining the growth of Medicare.
Robert D. Reischauer, one of the public trustees, said the latest projections still indicated that Medicare spending would grow faster than the economy as a whole, workers' earnings or the incomes of retirees.
"Under current law," Reischauer said, "both of these very important programs are fiscally unsustainable over the long run and will require legislative intervention."