Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, April 19, 1990 TAG: 9004190238
SECTION: NATIONAL/INTERNATIONAL PAGE: A11 EDITION: METRO
SOURCE: Associated Press
DATELINE: WASHINGTON LENGTH: Medium
"The board believes early corrective action is essential in order to avoid the need for later, potentially precipitous changes," the board said in its annual report to Congress.
The board urged lawmakers to "take early remedial measures to bring future [Medicare hospital insurance] program costs and financing into balance."
The projected bankruptcy date is a staple of the board's annual reports. In the early 1980s, it predicted bankruptcy in the 1990s, but the date slipped back as more optimistic forecasts were used later in the decade.
If economic growth is moderate, the Medicare Hospital Insurance Trust Fund will run out of money between 2003 and 2005, the board said Wednesday.
Under optimistic economic assumptions, money would be exhausted in 2018, but under a pessimistic scenario, the fund could run dry in 1999, the board said.
"These findings underline the urgency of our task in containing health care costs and spending our health care dollars more effectively and efficiently," Health and Human Services Secretary Louis Sullivan said.
The hospital insurance trust fund is financed with payroll taxes.
Medicare's other trust fund, the Supplemental Medical Insurance Trust Fund, is "actuarially sound," that is, should have enough money to meet its obligations, the board said. But the trustees said they were concerned about the soaring costs of the program, which pays Medicare Part B expenses - physician and outpatient services.
About 75 percent of the money in the Supplemental Medical Insurance Trust Fund comes from general federal revenues and 25 percent comes from premiums paid by beneficiaries.
The Medicare program provides medical benefits to about 30 million Americans age 65 and older and 3 million disabled individuals.
The board also reported that the Social Security trust funds that support benefits for the elderly, survivors and the disabled will remain financially sound well into the next century.
The Old Age and Survivors Insurance and Disability Insurance trust funds will take in more money than they pay out for the next several decades.
Based on intermediate assumptions, total income over the next 75 years is estimated to cover about 93.5 percent of the total amount paid out.
Because the trust funds are projected to remain solvent for the next 20 to 30 years, the trustees recommended no changes in either financing or benefits in the Social Security programs.
The voting members of the Social Security Board of Trustees include the secretaries of Treasury, Labor and HHS, as well as two "public" members, for which nominations are pending.
by CNB