The Social Security trust fund is slightly stronger than it was a year ago, but the Medicare program for the elderly is four years closer to insolvency as the baby boomer generation prepares to tap into both programs, their trustees reported Monday.
Social Security's projected insolvency date was extended to 2042, one year later than what was projected a year ago, according to the annual report released Monday by government trustees. But Medicare's insolvency date was moved up to 2026 from 2030 a year ago.
President Bush said in a statement the findings confirm the need for Congress to follow his suggestions for overhauling both programs.
"As we continue to work together to keep Social Security strong and reliable, we must offer younger workers a chance to invest in retirement accounts that they will control and they will own," Bush said, reiterating the message from his State of the Union address in January.
"As the report makes clear, Social Security faces long-term problems that demand bipartisan solutions," the statement said.
Bush has proposed allowing younger workers to start investing privately a portion of their Social Security taxes, but key Republicans in Congress have said they don't expect that kind of major overhaul taking place until after the 2004 election.
Government officials have been predicting for years that the retirement insurance and health care funds for the elderly — both financed through payroll taxes — will be pushed toward insolvency as more post-World War II baby boomers reach 65.
The trustees said the deterioration of Medicare's financial picture in the last year was due to projected lower tax receipts devoted to the program and higher expenditures for inpatient hospital care.
They projected that Medicare will have to begin dipping into its trust fund in 2013 to keep up with expenditures — three years earlier than expected a year ago. Social Security expenditures will start exceeding tax receipts for the program beginning in 2018, the trustees said.
"The trustees' report makes one thing eminently clear: Inaction is not an option," said Treasury Secretary John Snow. "The longer we wait, the more difficult the challenge will be to find solutions."
Bush has urged Congress to address the Medicare program's long-term route to insolvency by turning more of the program over to private insurance plans in the belief that competition will keep health care costs down.
Many Republican leaders have said that adding a prescription drug benefit without broad reforms would doom the already financially strained Medicare program. Democrats have accused the GOP of exaggerating the program's plight.
"Some will try to use today's report to justify their plans to turn Medicare into a voucher program," said Rep. Pete Stark, D-Calif. "But don't be fooled by Republican rhetoric. Solvency is still close to an all-time high."
He said the ultimate goal of Bush and his allies is "to siphon taxpayer funds to the insurance industry by pushing elderly and disabled Medicare beneficiaries into managed care and other private plans."