Medicare to go broke by 2019, trustees say

• Article
• Comments ()
• Click-2-Listen
• Videos

By

Medicare's trust fund will become insolvent in 2019, seven years sooner than predicted last year, according to a new report by Medicare trustees that partly blames the prescription-drug bill President Bush signed into law last year.

The annual report said that Medicare, which provides health insurance to the elderly, will also have to dip into its trust fund this year to cover insurance costs for hospital care, the program's biggest expense.

"The trust fund is seriously out of financial balance in the long range, and substantial reform will be required," the six trustees said in their report, released yesterday.

The trustees released their annual assessments of the short-term and long-term financial health of both Medicare and Social Security.

Social Security's outlook was little changed in this year's report. The payroll taxes coming into the program will be insufficient to cover payouts beginning in 2018, the same prediction made in last year's report.

But in the first report since passage of last year's Medicare overhaul, including the new "Part D" prescription-drug benefit, that program's trustees painted a gloomy picture.

"When the Part D program becomes fully implemented in 2006, general revenue transfers are expected to constitute the largest single source of income to the Medicare program as a whole -- and would add significantly to the federal budget pressures," the trustees said.

Of the seven-year decrease in Medicare's projected solvency, two years are attributable directly to the Medicare overhaul. Another two years are blamed on lower revenues and higher health care costs. The rest of the changes are attributed to a mixture of new assumptions and a finding that patients are generally less healthy than models predicted.