Social Security, Medicare funds ebb faster than expected Officials move up trust fund bankruptcy predictions by a year

June 04, 1996|By LOS ANGELES TIMES

WASHINGTON -- The government will report tomorrow that the Medicare and Social Security trust funds will each run out of money a year earlier than expected, officials said yesterday.

The Medicare trust fund, which pays the hospital bills of the elderly, will go bankrupt in 2001 if steps are not taken to shore it up, the trustees are to report.

"Hospital usage is way up," reflecting the needs of the fast-growing 85-and-over population, one official said. Last year's report predicted that the fund would be exhausted in 2002.

The Social Security retirement trust fund will be unable to pay full benefits in the year 2029, instead of in 2030 as predicted last year, according to the report.

The date for Medicare bankruptcy will reignite the partisan debate over that program.

Staving off bankruptcy for the short run can probably be achieved by making beneficiaries pay a bit more and giving doctors and hospitals a bit less, most experts agree. However, the long-range problem will require massive funds to give the 76 million baby boomers the blessings of ever-improving -- and ever more costly -- medical technology. The other alternative would be a sharp cut in benefits.

The Republicans sought changes last year designed to slow the rate of growth from the current figure of 10 percent annually to a pace of 7.5 percent, trying to assure solvency for at least a decade. Those revisions would save $168 billion over six years, which compares to $128 billion in savings proposed by President Clinton.

"Nothing is going to happen this year -- the real question is whether something is going to happen in 1997," said Gail Wilensky, a former administrator of the Medicare program and a senior fellow at Project Hope.

"We need to do something to buy ourselves some time to face the enormous problem of what to do with the impending retirement of the baby boomers," she said.

Told about the forthcoming report, Rep. Bill Thomas, a California Republican who is chairman of the health subcommittee of the House Ways and Means Committee, said the bitter, unresolved partisan debate means "we have lost a year." The report "should be enough to sober everybody up and we should sit down and get serious" about making changes to shore up the system, he said.

Spending has grown $90 billion beyond expectations in just a year, with the potential shortfall by 2006 projected to reach nearly $500 billion, he said, citing Congressional Budget Office studies.

"Democrats said the change we proposed was way too much, but what the president proposed was way too little," said Thomas. "At some point we have got to begin seriously talking about attacking this problem."

The White House has argued that sufficient short-term savings can come from trimming the growth in payments to doctors and hospitals. The GOP wants to do this, and also to impose tougher controls on home health care spending and adopt a more aggressive program of encouraging beneficiaries to move into health maintenance organizations (HMOs) and other forms of managed care.

Pub Date: 6/04/96

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