WASHINGTON – In light of a report released today by the Medicare and Social Security Trustees, U.S. Sen. Mike Johanns (R-Neb.) emphasized the urgency of addressing government spending and our national debt. The report concluded that the Social Security program is now operating under permanent annual deficits and that the Social Security trust fund will be exhausted by 2036. It also accelerated the year in which Medicare will become insolvent to 2024.
"While various proposals and ideas to address our soaring debt and deficit have been picked apart and criticized, we continue to see powerful evidence of the need for serious action on entitlements," Johanns said. "Today's report by the nonpartisan Trustees again rebuts the false notion that Social Security and Medicare – which constitute one-third of the federal budget – are in fine shape and not part of our debt crisis. Those interested in a responsible effort to get our fiscal house in order acknowledge we cannot draw lines in the sand when it comes to reining in our spending and getting our country back on a sustainable path."
The Medicare and Social Security Trustees report concluded:
• Both programs are already paying out more in benefits than they are collecting in taxes.
• Social Security's unfunded liability has increased: now projected at $6.5 trillion – up from $5.4 trillion last year.
• Social Security's insolvency is on the horizon, with Trust Funds expected to be insolvent by 2036.
• The Medicare Part A Trust Fund is expected to be exhausted in 2024, a full five years ahead of the date predicted in last year's report.
o The nonpartisan Congressional Budget Office projects insolvency by 2020.
• Medicare's projected unfunded obligations have increased from $36.3 trillion to $38.4 trillion.
• The Medicare Actuary states even these projections could be too optimistic:
o "The financial projections shown in this report…do not represent a reasonable expectation for actual program operations."
o For example, today's estimates assume Medicare physician payments will be reduced by 29.4 percent on January 1, 2012, which the Medicare Actuary calls an "implausible expectation."
o In addition, the Actuary states that due to changes to Medicare mandated by the health care law, "the prices paid by Medicare for health services are very likely to fall increasingly short of costs of providing these services," which would result in "severe problems with beneficiary access to care."