- The Washington Times - Wednesday, March 23, 2005

Medicare’s trustees yesterday reported that the program will hit key financial difficulties earlier than Social Security, even though Social Security’s financial outlook became slightly bleaker and Medicare’s improved last year.

“Medicare’s financial difficulties come sooner — and are much more severe — than those confronting Social Security,” the Social Security and Medicare Board of Trustees write in their report on the two systems’ financial health.

Taken together, both programs will grow from 7 percent of the U.S. economy to about 14.5 percent by 2040, the trustees say.

Social Security will begin spending more on benefits than it receives in taxes in 2017, and the assets credited to the program’s trust fund will be exhausted in 2041, both one year earlier than last year’s report predicted. Medicare’s hospital insurance program trust fund will be exhausted in 2020 — a year later than last year’s report predicted.

Health and Human Services Secretary Michael O. Leavitt, one of the trustees, said those numbers show the administration thinks it will have to revisit Medicare reforms.

“We are going to have to deal with the realities of Medicare in the same way we are now dealing with the realities of Social Security,” Mr. Leavitt said.

His remarks come two years after Mr. Bush called for a Medicare bill that “should strengthen the program’s long-term financial security.” Later in 2003, the president signed a bill that offered prescription-drug coverage, but many Republicans said it didn’t secure long-term cost savings.

Still, Mr. Leavitt said the legislation included some cost-controlling provisions, such as health savings accounts.

“Medicare modernization was not just about adding prescription drugs, though that was an important step. It’s also about change in the culture to one of prevention, where people are beginning to think about health and wellness, not just healing,” he said.

For now, administration officials said Social Security remains Mr. Bush’s focus, and that yesterday’s financial numbers only boost the president’s call for personal accounts.

“The numbers leave nothing to doubt about the fundamental financial condition of the Social Security system. It’s on an unsustainable course. The report this year simply underscores that,” said Treasury Secretary John W. Snow, another trustee.

Democrats, though, said the report shows a system that is not in dire straits.

“Where’s the crisis?” said Rep. Peter A. DeFazio, Oregon Democrat. “The report released today shows that Social Security will be able to pay 100 percent of promised benefits until at least 2041. And after that date, when the Social Security Trust Fund has been drained and the program takes in fewer dollars than it pays out, it will still be able to cover 74 percent of promised benefits.”

And others said it’s more evidence that Mr. Bush’s preferred Social Security reform of personal accounts isn’t the right solution.

“Common sense alone would tell us that if we’re facing a future shortfall in the Social Security trust fund, the president’s proposal would make the problem worse,” said Rep. Sander M. Levin of Michigan, the House Democrats’ point man on Social Security.

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