According to the Obama administration, the Medicare fund that pays hospital bills for older Americans is now expected to run out of money in 2017. The projection last year was 2019, but that was before the recession caused millions of workers to lose their jobs, denying the federal government millions in payroll taxes that fund Medicare and Social Security (which also is closer to going bankrupt, now slated for 2037). Medicare currently provides health insurance to about 45 million people, and that figure is only going to balloon as more baby boomers retire.

 

With Medicare and Social Security now consuming more than $1 trillion a year (or about one-third of the federal budget), Treasury Secretary Timothy Geithner said it was imperative to control runaway growth in both public and private health care expenditures. President Obama wants to somehow reduce the rising costs of health care in the United States, while also guaranteeing access to the tens of millions of Americans currently without any health insurance.

 

Republicans in Congress used the bleak news about Medicare’s future to attack Democratic proposals to create a new government-run health insurance program to help the uninsured. “The government-run healthcare programs we already have are unsustainable,” Congressman Tom Price (R-GA) told the New York Times. “It should be obvious that putting more people under the inflexible control of Washington is no way to bring down medical costs.”

 

For the immediate future, certain Medicare beneficiaries will be facing higher premiums next year ($104) and in 2011 ($120). This group includes those new to Medicare and those with higher incomes (over about $85,000 a year for individuals and $170,000 for couples). Federal officials say 75% of beneficiaries will not pay any increase, for the time being.

-Noel Brinkerhoff

 

Recession Drains Social Security and Medicare (by Robert Pear, New York Times)

Report: Medicare Fund is 8 Years From Insolvency (by Noam Levey, Los Angeles Times)