Trustees: Medicare Relatively Sound, Social Security Disability Shakier

Tuesday, 29 Jul 2014 07:37 AM

By Elliot Jager

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Medicare will be able to pay full hospital coverage for its clients through 2030. Social Security's disability program will start running out of money late in 2016, The Wall Street Journal reported, citing a report by the trustees of Social Security and Medicare

Some 11 million Americans depend on disability benefits up from 7.9 million in 2004.

To fill the anticipated hole, Treasury Secretary Jacob Lew has agreed to allocate additional payroll-tax revenue to the disability fund. The money would come from Social Security's main program which pays monthly retirement benefits.

The combined Social Security funds would deplete their reserves by 2033 assuming Congress agrees to the change, the Journal reported.

Experts are at a loss to explain why Medicare's hospital-insurance program, which covered another 1 million people in 2013, spent less on benefits than in 2012 except to note that fewer patients have been hospitalized and re-admitted. What they can say is that the program will remain solvent four years beyond earlier projections through 2030, the Journal reported.

Department of Health and Human Services Secretary Sylvia Mathews Burwell credits Obamacare with the reduction in hospital readmissions. The Affordable Care Act gives hospitals incentives not to readmit patients.

Another guess is that aging baby boomers are in relative good health compared to their parents and grandparents.

Between the aging U.S. population and rising healthcare costs, the Medicare trust fund is projected to be depleted in 2030 when beneficiaries would have their benefits reduced.

There is no consensus about whether or how to reform Social Security. Some will point to Medicare's stability as making the case for doing little or nothing. That would be a mistake, according to Robert Reischauer, a Democrat and trustee of the program.

"The sooner that lawmakers act, the broader will be the array of policy options that they can consider and the greater the opportunity will be to craft solutions that are both balanced and equitable," the Journal reported.

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