Social Security and Medicare: outlook worsens by the day

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Social Security and Medicare: outlook worsens by the day

Wednesday, May 13th, 2009 | Health Care, Social Security |

AP - Social Security and Medicare finances worsen:

The Congressional Budget Office recently projected that Social Security will collect just $3 billion more in 2010 than it will pay out in benefits. A year ago, the CBO had projected that Social Security would have a much higher $86 billion cash surplus for the 2010 budget year, which begins Oct. 1.

The trustees report projected that Social Security’s annual surpluses would “fall sharply this year,” then remain at a reduced level in 2010 and be lower in the following years than last year’s projections. The report said that the Social Security annual surplus would be eliminated entirely in 2016, reflecting increased demands from the wave of 78 million baby boomers retiring.

That means Social Security will have to turn to its trust fund to make up the difference between Social Security taxes and the benefits being paid out beginning in 2016. The trustees projected the trust fund would be depleted in 2037, four years earlier than the 2041 date in last year’s report.

And what about Medicare?

Medicare’s condition is more precarious, reflecting the pressures from soaring health care costs as well as the drop in tax collections.

That’s all the details they provide. They presumably can’t bear to bring themselves to say how bad off Medicare is.

Which would be typical at least. People will talk about the federal deficit. Some brave souls will talk about Social Security shortfalls. Few people have the fortitude to explain that Medicare in anything like its current form is completely unsustainable. From a post last week interviewing a Wharton economics professor:

Medicare is tough for two reasons. One, the shortfall in Medicare is six to seven times larger than in Social Security. Social Security is a major problem; Medicare is a crisis. You add both of those… shortfalls together and you’re getting something that’s … between $80 and $120 trillion in total present value shortfalls. … People can’t even imagine how big that number is. If you took the total value of the United States, except for the people (all the land, houses, buildings, everything that’s non-perishable, your washer and dryer, cars, and so forth), it has about a value of about $50 trillion. So we’re talking about a shortfall of twice the value of the value of the U.S. except for the people. Now, the value of the people is about three times that. We’re just talking about biblically large shortfalls. We’ve never seen this type of problem.

We have no idea how to fix Medicare, in part because we don’t have the stomach to discuss it. Yet while our country’s largest medical care program is heading to certain doom George Bush introduced the unfunded Medicare prescription drug program and Barack Obama has expanded other government health programs like SCHIP and is trying to expand health programs further.

Take any politician’s estimate of how much these programs will cost and double it, then double it again. Then realize they have no idea how they’ll pay for all of this, because they don’t even know how they’ll save Medicare.