Academic journal article Social Security Bulletin

Summary of the 1998 Annual Social Security and Medicare Trust Fund Reports

Academic journal article Social Security Bulletin

Summary of the 1998 Annual Social Security and Medicare Trust Fund Reports

Article excerpt

A Message to the Public From the Board of Trustees

Social Security and Medicare are among our most important public programs. As a current or future beneficiary, you should know that Social Security and Medicare have always paid full benefits on time.

Each year we, the Trustees of the Social Security and Medicare Trust Funds, report in detail on their financial condition. The reports describe their current and projected financial condition, within the next 10 years (the "short term") and over the next 75 years (the "long term"). This document is a summary of the 1998 reports.

The most important new information in this year's reports is that, as we recommended last year, legislation was enacted to help control Medicare cost growth. The Balanced Budget Act of 1997 not only pushed back the exhaustion date of the Hospital Insurance (HI) Trust Fund, but also reduced by onehalf the projected long-range financial imbalance facing that program.

To facilitate longer term reform of Medicare, including the rapid growth of costs of the Medicare Supplementary Medical Insurance (SMI) program, we recommended establishing a national advisory group that could develop recommendations for effective solutions to Medicare financing problems. We are therefore gratified that the Balanced Budget Act also established the National Bipartisan Commission on the Future of Medicare, and that the Commission has begun its work. We also are pleased that program integrity efforts aimed at reducing waste, fraud and abuse appear to be having an impact on cost growth in some areas.

Finding good solutions to providing medical care for the elderly and disabled will be a continuing and difficult challenge as our population ages and medical care evolves. The action taken last year was a significant first step in meeting that challenge. It reaffirms our strong belief that even though periodic adjustments will likely be necessary, we can find good solutions to Medicare's financing problems.

The Social Security Trust Funds are projected to be adequately financed until 2032. At that time, annual tax income to the combined trust funds is projected to equal about threefourths of the cost of benefits payable. Individually, the Old-Age and Survivors Insurance (OASI) Trust Fund, which pays retirement and survivors benefits, is projected to be able to pay full benefits on time for about 36 years-until 2034. The Disability Insurance (DI) Trust Fund, which pays disability benefits, is projected to be able to pay full benefits until 2019. It is important to address both the OASI and DI problems soon to allow time for phasing in any necessary changes and for workers to adjust their plans to take account of those changes.

Extensive public discussion and analysis of the practical implications of alternatives is essential to developing the broad support needed to enact any Social Security reform legislation. Thus, we cannot overstate the importance we attach to President's Clinton's plan for bipartisan forums on Social Security reform across the country this year followed by a White House Conference in December and development of bipartisan legislation early next year.

It is critical that every citizen, young, old, and in-between, participate in or follow closely the information and arguments brought out in the forums and make their own views known. There is time to discuss and evaluate alternative solutions with deliberation and care, and we must use the coming months to find changes that effectively guarantee a basic level of income for the aged, disabled, and survivors of deceased workers. Social Security is too important both to individuals who receive benefits and to our society as a whole to fail to find an acceptable means for protecting this program's future.

With proper public discussion and timely legislative action, Social Security and Medicare will continue to play their critical role in the lives of virtually all Americans. …

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