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When Will Medicare Go Bankrupt ?
Medicare is funded by dedicated revenues generated by payroll taxes and premiums. But the cost of expenditure under the program is escalating at an alarming rate. It has been predicted that program costs will exceed 45 percent of general revenues by 2013. |
Under the 2003 Medicare Reform Law, the trustees are obliged to sound a ‘Medicare funding warning’ if the 45 percent threshold is anticipated to be crossed within the forthcoming 7 years. The warning was first sounded in their 2006 report. The warning serves to alert the President to propose legislative remedial measures within 15 days of the next budget. Congress, according to the law, must consider the President’s proposal on an expeditious basis.
With revenues and spending sadly mismatched, common opinion is reinforced that Medicare is a seriously undercapitalized and severely flawed program.
Since the late 1960s, medical costs have exceeded economic growth annually by 3 percentage points. The primary reason is due to dramatic advances in medical technology and patient treatment. While the benefits are beyond dispute, the advantages come with an enormous price tag.
Politicians have been compelled to sit up and take note. Any change that impacts the elderly will reflect on the ballot boxes and invite bitter condemnation. The elderly, who represent a large percentage of the electorate, can be stridently vocal.
Current projections predict that the Social Security trust fund will be depleted by 2041. The same voice of doom anticipates that the Medicare Trust will precede this by two decades and exhaust itself by 2020.
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When Will Medicare Go Bankrupt ?
