Slower growth in U.S. healthcare spending and expected savings from Obamacare are shoring up the funding outlook for the federal Medicare program that covers the hospital bills of the elderly, trustees of the program said on Monday.
The program’s trust fund for hospital care will run out of money in 2030, four years later than previously estimated, the trustees said in a report. When the fund runs dry, Washington would only be able to partially cover its obligations.
The trustees said the fund would last longer than previously thought because “expenditures in 2013 were significantly lower than the previous estimate.” They said changes to Medicare under President Barack Obama’s healthcare overhaul appeared to be creating “substantial savings.”
At the same time, trustees for the country’s Social Security program repeated their warning that Washington would run out of the money needed to fully pay disability benefits by 2016.
At a news conference, the trustees called for congressional action to address both Medicare and Social Security.
“Both of these vitally important programs are fiscally unsustainable over the long run and will require legislative intervention to correct,” said trustee Robert Reischauer.
“The sooner the policymakers address these challenges, the less disruptive the unavoidable adjustments will be… The sooner the lawmakers act, the broader will be the array of policy options that they can consider.”
Added sole Republican trustee Charles Blahous: “It’s getting very late in the game to forge a bipartisan compromise to sustain Social Security’s finances.”
The report’s conclusions largely mirrored those made earlier this month by the nonpartisan Congressional Budget Office, which also pushed back to 2030 its projection of when Medicare’s main trust fund would be exhausted.
Depletion of the Medicare and Social Security trust funds does not mean that all benefits would stop. At the current rate of payroll tax collections, Medicare would be able to pay about 85% of costs in 2030, declining to 75% by 2050.
Social Security would be able to pay about 805 of disability benefits starting in “late 2016,” the Treasury Department said in a statement. In 2033, the Social Security program would only have money to cover about three-quarters of the pensions that it pays, Treasury said.