Trustees Report: Health Law Extends Medicare Trust Fund Solvency 12 Years

The Associated Press: The annual trustees report on Medicare and Social Security found that Medicare's hospital trust fund will last 12 years longer because of the health overhaul - until 2029 - but only if the government achieves significant savings in health care. Meanwhile, the recession has worsened the near-term outlook for the Social Security trust fund.

Both programs are "facing strains from an aging population and an economy that can't seem to get out of low gear," the AP writes. "And despite assertions to the contrary by the Obama administration, the new health care law doesn't improve Medicare's solvency by much. … Demand for services is going up, and income from payroll taxes can't keep pace. Meanwhile, the government has used trust fund surpluses to pay for other needs, leaving Medicare and Social Security with a pile of IOUs." The trustees include administration officials, but the technical work is performed by the independent Office of the Actuary, a health department body that has irked the White House by raising questions about how the health overhaul will affect Medicare (Alonso-Zaldivar and Crutsinger, 8/5).

The New York Times: "The financial outlook for both Medicare and Social Security improved due to changes mandated by the new law overhauling the health insurance system," according to the programs' trustees. "But Medicare, especially, continues to face insolvency in the long term as the population ages. Medicare's hospital insurance trust fund should remain solvent until 2029, or 12 years more than projected in last year's report, the trustees said. The long-term, 75-year shortfall for the hospital fund also is reduced, as are the projected costs of the separate Medicare Supplementary Insurance program." But the Medicare system will "require additional reforms to be financially sustainable, the trustees say" (Calmes, 8/5).

The Wall Street Journal: "Obama administration officials touted the projections in the annual report from Medicare and Social Security trustees as evidence of improvements brought about because of the health-care law. But they also noted that the improved outlook rests upon the successful implementation of the law." According to The Journal, elements of the health care law that "restrain the growth of Medicare costs" and "increase revenue to the Medicare trust fund by raising payroll tax and imposing a new Medicare tax on investment income" combine to improve the program's solvency (Vaughn and Hughes, 8/5).

Bloomberg: "In 2009, Medicare covered 46.3 million beneficiaries and paid $502 billion in benefits, the report said. The health law cuts payments to medical providers under the Medicare program, reduces future spending and puts in place programs such as the “Center for Medicare and Medicaid Innovation,” designed to develop future cost efficiencies" (Armstrong, 8/5).

MarketWatch: "Due to the recession the Social Security program is expected to run a deficit of $41 billion this year, before returning to surplus in the years 2012-2014" (Schroeder, 8/5).

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