How Will Health Care Reform Affect Social Security and Medicare?
An Associated Press source says that the yearly report on the financial status of Social Security and Medicare will be released three months later than usual this year in order to reflect how health care reform will financially impact both programs.
Last year’s trust funds report projected severe challenges to both programs. The economic recession was a key cause for dire predictions, as was retiring baby boomers and escalating health care costs.
The March 2009 report stated that annual surpluses of tax income over expenditures is expected to decline and turn into cash flow deficits by 2016. It was projected that by 2037, trust fund assets used to make up the deficits would deplete reserves. By then, three-fourths of scheduled Social Security benefits would be paid by tax income through 2083.
For Medicare, the Hospital Insurance (HI) reserves would be depleted in 2017 and benefits paid from tax income would decrease to 50 percent in 2035 and 30 percent in 2080. The additional strain on Medicare comes from escalating health care costs.
There is more to the story. Investors.com predicts that Social Security’s Disability Insurance Trust Fund is running dry and, as it stands now, disability benefits could be reduced by 8 percent in 2018 and 16 percent in 2019.
“The dire financial state of Social Security’s disability program is almost always overlooked amid the broader debate over the fiscal health of the program. But 2018 is important because it is the earliest date by which Congress would be forced to act to stave off a sudden hit to some of Social Security’s neediest beneficiaries.” (Investors.com)
In February, President Obama established a bipartisan national commission of fiscal responsibility to develop a deficit reduction plan, of which Social Security is a key issue and will undoubtedly attract much debate.
In the meantime, will health care reform contribute to an improvement in the financial health of Social Security and Medicare? It will be interesting to find out what the Trustees have to say in the 2010 report which will be released in June.