The short-term financial underpinnings of Medicare and Social Security brightened in the past year, the programs' trustees reported Monday. But the long-term financial condition of the old-age health program slipped because of higher projected health care costs.
The trustees' annual report said the Medicare trust fund for hospital expenses would remain solvent until 2029, four years longer than previously estimated, largely because of the strong economy and a successful crackdown on Medicare fraud. The Social Security trust fund gained an extra year, to 2038, before its funds are projected to be exhausted and the government can pay only partial benefits.
President Bush seized on the report to make the case for his plans to partially privatize Social Security and to overhaul Medicare. "We have only so many years to get the systems back on track," he told Hispanic business leaders at the White House. "It's time to quit the posturing and time to reform the systems."
Democrats countered that the findings undercut Bush's bid to fundamentally change the old-age programs. Sen. Edward Kennedy, D-Mass., said, "There is no need to condition passage of a prescription drug benefit this year on passage of radical changes to the underlying Medicare program."
While the projections hold political significance, they are subject to educated guesses by the trustees about wages and health 75 years into the future. The reports are derived from complex calculations involving economic growth, life expectancy and other data _ some of which are significantly more conservative than the estimates used to project record budget surpluses in the next decade.