- The Washington Times - Friday, May 31, 2013

The Obama administration took a victory lap after the latest Medicare numbers released Friday showed the program’s solvency has been extended by two years — a development the president’s aides said is a result of the health care law.

Medicare’s trustees said the program’s trust fund now faces depletion in 2026, which is two years later than last year’s projection. In the long run, however, Medicare remains on an unsustainable path.

Health and Human Services Secretary Kathleen Sebelius said the modestly improved outlook is attributable to slowed health care spending in recent years and provisions in the Affordable Care Act of 2010 designed to cut fraud and abuse, reduce hospital readmissions and cut “excess payments” to the Medicare Advantage program, which allows beneficiaries to acquire private plans.

“With the health care law, our goal was to put Medicare on a more stable footing not by cutting benefits but by putting reforms in place to ensure that Medicare dollars were spent more wisely,” she told reporters on Friday. “And the past few years have borne out that promise.”


Despite glimmers of hope, Treasury and health officials said with thousands of baby boomers entering the health entitlement program that now serves about 42 million seniors and the 8.5 million disabled Americans, the fund will continue to pay out more than it takes in.

Revenues will only be able to pay for 87 percent of the Medicare Hospital Insurance Trust Fund by 2026, and trustees project that dedicated revenues will decline slowly to 71 percent of the program’s cost by 2047, according to an annual report by the Social Security and Medicare Board of Trustees.

Making matters worse, the Social Security program ran a cash-flow deficit of $55 billion last year and one of its two trust funds, used to pay disability benefits, will go bust in three years, according to the annual report by the Social Security and Medicare Board of Trustees.

Disability insurance is the smaller part of the Social Security program, while the larger portion — the pension program for the nation’s retirees — is projected to be solvent for two more decades.

But the combined Old-Age, Survivors and Disability Insurance (OASDI) program is already seeing a negative cash flow, taking in just $731 billion in taxes and other money from general funds last year while paying out $786 billion in benefits.

Trustees who released the report on Friday implored Congress to act swiftly, in a bipartisan manner, to shore up the nation’s largest entitlement programs.

“We have the maximum range of options the sooner we address it,” Treasury Secretary Jack Lew said Friday.

Entitlement reform has loomed large in deficit talks on Capitol Hill, with GOP lawmakers calling for changes as a prerequisite for meaningful negotiations with the White House.

President Obama has said he will press his fellow Democrats to look at tough changes to entitlements, despite the party’s historic reluctance to do so.

Recent studies show a slowdown in health spending is tied in large part to the economic slowdown in the past several years. However, administration officials said they hope cost-saving aspects of Mr. Obama’s health care reforms will sustain the trend as the economy improves.

Mrs. Sebelius and administration officials are gathering support for Mr. Obama’s signature health law before its main provisions take effect next year. Its mandates and regulations, though, continue to attract the ire of Republican lawmakers on Capitol Hill who see the law as a job-killer that will send insurance premiums soaring.

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