WASHINGTON — The financial condition of Medicare is growing progressively worse and its problems will eventually eclipse those of Social Security, the trustees of the government's two biggest social programs reported Monday.
But the warning, for all its urgency, appeared unlikely to spur major action on such a sensitive issue in an election year. Far from cutting back, Congress and the president have expanded Medicare with the creation of the prescription drug benefit.
"There is no crisis," Rep. Pete Stark (D-Fremont), the senior Democrat on the House health subcommittee, said in a sharp response to the report. "Much as President Bush manipulated intelligence to justify an unnecessary war in Iraq, his administration is using these projections to rationalize dismantling Medicare."
Social Security and Medicare help virtually every American family, and the trustees' report provides an annual accounting of the programs' long-term financial health. By law, four of the six trustees are senior officials of the administration in office and two are independent experts chosen to represent the public.
Compared to Medicare, Social Security faces a rosy future.
This year's report projects that the massive Social Security trust fund will be able to pay full retirement and disability benefits for another 34 years. That will change in 2040. Unless benefits are reduced, taxes are increased or additional funds are allocated from some other source, Social Security will run out of reserves and will only be able to cover 74% of promised benefits. The 2040 date is one year closer than the trustees had projected in 2005.
If Congress chose to plug the Social Security gap solely by raising more revenue, it would have to jack up Social Security's share of the payroll tax -- now 12.4%, shared equally by employers and workers -- by an immediate 2.02 percentage points. If it chose to close the gap by cutting benefits, it would have to slash them by 13.3% below current levels.
Medicare faces a more serious problem. Its "financial difficulties come sooner -- and are much more severe -- than those confronting Social Security," the report said.
The huge Medicare trust fund that pays for inpatient care will only be able to cover 80% of estimated billings in 2018, and its condition will deteriorate dramatically after that. The 2018 date is two years closer than the trustees had projected in 2005.
