Academic journal article Social Security Bulletin

Summary of the 1999 Annual Social Security and Medicare Trust Fund Reports

Academic journal article Social Security Bulletin

Summary of the 1999 Annual Social Security and Medicare Trust Fund Reports

Article excerpt

A Message to the Public From the Board of Trustees

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 1999 reports.

The most significant new information in this year's report is that the continued strong performance of the U.S. economy and improved prospects for future performance have improved the financial status of both the Social Security and Medicare Hospital Insurance Trust Funds and delayed the dates when the funds are projected, under current law, to run short of money to pay full benefits.

The Hospital Insurance (HI) Trust Fund, which pays inpatient hospital expenses, is projected to be able to pay full benefits until 2015, 7 years longer than projected in last year's report. Income exceeded expectations as a result of robust economic growth, and expenditures declined due to implementation of the Balanced Budget Act of 1997, low increases in health care costs generally, and continuing efforts to combat fraud and abuse.

The Supplementary Medical Insurance (SMI) Trust Fund, which pays doctor's bills and other outpatient expenses, is expected to remain adequately financed into the indefinite future, but only because current law sets financing each year to meet the next year's expected costs. Although the rate of growth of SMI costs has moderated in recent years, outlays have still increased 41 percent over the past 5 years, or about 9 percent faster than the economy as a whole.

The Social Security trust funds are projected to be adequately financed until 2034, 2 years later than projected last year. At that time, annual tax income to the combined trust funds is projected to equal about 71 percent of the cost of benefits. 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 until 2036. The Disability Insurance (DI) Trust Fund, which pays disability benefits, is projected to be able to pay full benefits until 2020.

Despite the improvement in the financial outlook of Medicare, the projected increases in medical care costs still make solutions to Medicare's financing problems more complex than those for Social Security. But the longer run financing problems of both Social Security and Medicare need to be addressed soon to allow time for phasing in any necessary changes and for workers to adjust their retirement plans to take account of those changes.

In this regard, we are encouraged by the high priority the President and the Congress are giving to the resolution of the Social Security program's projected long-range financing shortfall. We strongly recommend that similar urgency be attached to the task of addressing Medicare's long-term financial situation.

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.

Summary of the 1999 Annual Reports

The Board of Trustees

There are six Trustees: the Secretary of the Treasury, Robert E. Rubin; the Secretary of Labor, Alexis M. Herman; the Secretary of Health and Human Services, Donna E. Shalala; the Commissioner of Social Security, Kenneth S. Apfel; and two members appointed by the President and confirmed by the Senate to represent the public. Currently, the Public Trustees are Marilyn Moon, an economist who has written extensively on Medicare, and Stephen G. Kellison, an actuary who has taught and consulted widely on social insurance. All trustees serve on the Boards of all of the trust funds described here.

Trust Funds

The trust funds are financial accounts in the U.S. Treasury. Social Security and Medicare taxes, premiums, and other income are deposited in these accounts, and Social Security and Medicare benefits are paid from them. …

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