WASHINGTON, March 23 (UPI) -- U.S. officials said Tuesday that Medicare is seriously underfunded and will suffer negative cash flow by 2019, seven years earlier than currently expected.
The Medicare and Social Security trustees released their annual reports on each program and U.S. Treasury Secretary John Snow said program costs must be trimmed.
"There is a hopeful note and that is all of the assumptions on Medicare see it growing at (gross domestic product) plus 1 percent ... If we could reduce the cost increase to just GDP the changes are dramatic," he said.
Snow said that reduction would mean Medicare's portion of the GDP in 2050 would drop from the predicted 11 percent to just 6 percent. In 2003, Medicare spending totaled more than $280 billion.
Medicare's financial problems come from many sources -- including increased utilization of medical services that leads to more health spending, increases in the costs of healthcare, and fewer under-65 workers contributing payroll tax dollars to the trust fund that pays for a large portion of Medicare spending.
Also, there will be 76 million baby boomers retiring in the upcoming decades, adding to the problem