Report finds Medicare stronger, social security worse in short run

Medicare’s trustees projected on Thursday that the program will remain financially solvent for 12 additional years, until 2029, because of the cost-cutting measures in President... More Below... Posted by on Aug 5th, 2010 and filed under US.

Medicare’s trustees projected on Thursday that the program will remain financially solvent for 12 additional years, until 2029, because of the cost-cutting measures in President Barack Obama’s recently enacted health care legislation.

The report said that the financial outlook for Social Security is “little changed from last year.” It added that, in the short run, the financial condition of the retirement program has worsened because of high unemployment, which has reduced payroll tax revenues. Money flowing out of the program this year exceeds money flowing in, for the first time.

The Social Security trust fund would be exhausted in 2037, the same date as projected last year, the trustees predicted. However, this was “not a cause for panic” because continuing tax revenue would still be sufficient to pay more than 75 percent of benefits even after exhaustion of the trust fund, said Social Security Commissioner Michael J. Astrue.

As the population ages and health care costs rise, both programs continue to face intense financial pressure in coming decades. In particular, Medicare faces eventual insolvency if more is not done to balance its obligations to provide health care to older Americans with the tax revenues that pay for the program.

(Thanks to The New York Times and Wikipedia)