US says health law will extend Medicare fund
But gains may not happen if savings don’t materialize
WASHINGTON — The annual checkup of the government’s big benefit programs for the elderly shows that the Obama administration’s sweeping health care overhaul will extend the life of the Medicare hospital insurance fund by 12 years.
But officials cautioned yesterday that the dramatic gain, reflected in the annual trustees report for Medicare and Social Security, will depend on achieving significant savings in health care in the coming years.
The report found that the Medicare Hospital trust fund will not be exhausted until 2029, 12 years longer than estimated last year. That improvement was credited to the cost savings that will occur with the passage earlier this year of health care legislation.
The trustees said the recession had made the outlook for the Social Security trust fund worse in the near term, however.
They said the Social Security program is projected to pay out more in benefits than it collects in taxes for the first time this year and next year. The Social Security trust fund is expected to be exhausted in 2037, the same date as in last year’s report.
The report noted that achieving the health care savings needed to extend the life of the Medicare trust fund “may prove difficult and will probably require that payment and health care delivery systems be made more efficient than they are currently.’’
The administration delayed issuance of the trustees report, which normally comes out in the spring, to recalculate projected spending estimates based on the changes the new health care law brought about or will bring about.
Treasury Secretary Timothy Geithner, the head of the trustees panel, said that while the new report showed very positive developments from the new health care law it also underscored “that we must continue to make progress addressing the financing challenges’’ facing both Medicare and Social Security.
The trustees report said Social Security pension and disability payments will exceed revenues for this year and 2011, reflecting a deep recession that has knocked millions of people off payrolls, which means they are not paying Social Security payroll taxes.
The report said the program would return to the black in 2012 through 2014 but that benefit payments will again exceed tax collections in 2015. For every year after 2015, Social Security will be paying out more than it receives in tax collections under the impact of the retirements of 78 million baby boomers, the report projects.
The government will then have to turn permanently to its trust fund to make up the difference between Social Security taxes and the benefits being paid out. The trust fund, which exists in paper form in a filing cabinet in Parkersburg, W.Va., are bonds backed by the government’s “full faith and credit’’ but not by any actual assets. That trust fund, currently at $2.5 trillion, has been spent over the years to fund other parts of government.