Social security, Medicare funds solvent -- for now

WASHINGTON -- Medicare's hospital insurance fund will run out of money as early as the year 2000, but other Medicare and Social Security trust funds remain solvent, annual reports on the trust funds say.

Based on projected program growth, income and expenses, the Social Security and Medicare trustees issued reports late Thursday estimating the financial status of the government trust funds.


Of the four trust funds, two are in relatively good shape and two require strengthening.

The Medicare hospital insurance trust fund 'is severely out of financial balance,' the report said. Rapidly rising health care costs and declining employee contributions could result in insolvency between 2000 and 2009.

Currently, there are about four covered workers supporting each person actually enrolled in the Medicare hospital insurance program. In the next century, the ratio is projected to drop, to about two covered workers supporting each enrollee.


'Under all the assumptions, the hospital insurance trust fund is projected to become exhausted even before the major demographic shift begins to occur,' the report said.

The trustees urged congressional action to curb cost increases, including perhaps a comprehensive health care reform package.

Social Security's Disability Insurance Trust Fund will run out of funds by 1997 unless more of the Social Security tax is allocated toward it. Currently, 5.6 percent of the tax is allocated to the Old Age and Survivor's Insurance fund and 0.6 percent is allocated to the Disability Insurance fund.

Such a reallocation would shift funds from the more solvent to the underfunded one but would not require a tax increase.

The trustees also raised concerns about the Medicare Supplementary Medical Insurance program because -- while the fund is sufficient to cover program costs -- those costs have risen 36 percent faster than the economy.

Members of the board are Treasury Secretary Nicholas Brady, Labor Secretary Lynn Martin, Health and Human Services Secretary Louis Sullivan, former Social Security Commissioner Stanford Ross, and former Assistant Labor Secretary David Walker. Ross and Walker are public trustees appointed by the president and confirmed by the Senate for four-year terms.


The reports estimated the Social Security funds for old age and survivor's insurance and disability insurance will receive about $47 billion more than paid out in 1992.

About $338 billion will go into the funds and $291 billion will be paid out, the trustees estimated.

Based on current projections, the funds would continue growing for the next 22 years but would begin to decline around the year 2013 until funds were exhausted in the year 2036.

Approximately 132 million workers are covered under Social Security programs, and about 41 million people receive benefits.

'In the Social Security program, current projections indicate continued substantial growth of the trust funds over the next several decades, helping to ensure that Social Security can meet its financial commitments in the next century,' Sullivan said.

In an interview for a syndicated television program, John McLaughlin's 'One on One,' Sen. John Danforth, R-Mo., warned that lawmakers must come to grips with the growing costs of federal entitlement programs, including Social Security and Medicare.

'The Medicare program is going to be a disaster soon, as is Medicaid. We have to face up to the American people that we cannot continue business as usual,' Danforth said.


The American Association of Retired Persons called on Congress to act quickly on comprehensive health care reform as a way of shoring up the Medicare hospital fund.

'This is an alarming development,' said Horace Deets, AARP executive director. 'Congress must do all it can to honor the benefit promise for every generation of disabled and retired workers and their families,' Deets said.

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