Social Security intake from tax revenue will fall below program
costs this year. In annual reports on the fiscal health of Social
Security and Medicare, Obama administration cites 'work left to do.'
The Obama administration accentuated some positive news in its
annual status report on Medicare and Social Security, but
acknowledged that tough work remains to put both programs on sound
The upbeat news: The sweeping health-care reform law enacted
earlier this year is expected to improve the financial outlook for
Medicare, extending the program's solvency by about 12 years, said
the Medicare trustees.
"These are very, very substantial improvements," said Treasury
Secretary Tim Geithner, who spoke with other Obama Cabinet officials
and co-trustees in releasing the reports Thursday.
Yet the long-term challenges facing Medicare and Social Security
remain in place, the reports found.
Key conclusions from the trustees:
- Social Security's combined trust funds (for old-age and
disability benefits) will be exhausted in 2037, an estimate that's
the same as in last year's report. At that time, tax revenue coming
in would be able to pay about 78 percent of benefits.
- Social Security tax revenues will "slightly" fall below program
costs in 2010. Tax revenues are projected to exceed program costs in
2012 through 2014, and then permanently fall below program costs in
2015 - one year sooner than the estimate in last year's report. The
poorer outlook stems mainly from the recession's impact on the
- Medicare's Hospital Insurance Trust Fund (also known as
Medicare Part A) is now expected to remain solvent until 2029, 12
years longer than was projected last year, due to the health-care
reforms. But the report notes that law means that "the projections
are much more uncertain than normal, especially in the longer-range
- Costs for Medicare Part B (for services including physician
bills) and Part D (prescription-drug coverage) are forecast to rise
substantially faster than the growth of the US economy or taxpayer
incomes. The drug costs are projected to grow 9.4 percent a year,
versus projected US economic growth of 5.1 percent a year through
2019 (before accounting for inflation). Part B costs could grow at a
pace similar to their 8.3 percent annual growth over the past five
years, the report says.
"We have a lot of work left to do," Health and Human Services
Secretary Kathleen Sebelius said at the news conference. Even to
reap the extra 12 years of solvency for Medicare Part A, she said,
will require effective implementation of the Obama health reforms.
The reports were delayed this year so that the impacts of the new
health law could be factored into the forecast. …