By Sam Baker and Julian Pecquet - 05/13/11 07:48 PM EDT
Medicare will run out of money five years earlier than previously estimated because of the slowing economy, the program's trustees said in their annual report Friday.
By 2024, the trust fund that pays for seniors’ hospital stays will be paying out more money than it takes in, the trustees warned. Social Security is projected to reach that imbalance in 2036.
The costs of Medicare and Social Security “are not sustainable ... and will require legislative corrections,” the trustees said.
“Having the Affordable Care Act in place is the main reason that those projections are not worse,” Health and Human Services Secretary Kathleen Sebelius said at a news conference Friday. “What the trustees’ report shows is that the Affordable Care Act has put Medicare on a much more sustainable path.”
The trust fund only pays for certain Medicare benefits, mostly related to hospital care. Total Medicare costs will be about 25 percent lower than they would have been without healthcare reform, according to the report. But Medicare spending is still expected to rise dramatically.
Rep. Paul Ryan (R-Wis.) seized on the report to push his proposal to turn Medicare into a system of subsidies to help seniors buy private insurance.
“Rather than allow opponents of reform to allow Medicare to collapse, the House-passed budget saves Medicare, making no changes for those 55 and older and offering future generations a strengthened, personalized Medicare program they can count on,” Ryan said in a statement. “It also stops the raid on the Medicare trust funds – ensuring that Medicare savings go toward saving Medicare, not creating a brand new entitlement.”
Sebelius reiterated the administration’s opposition to that proposal at Friday’s news conference, saying it would shift costs onto seniors.
The Medicare trustees said in last year’s report that the healthcare reform law had extended the life of the Medicare trust fund by 12 years. That projection declined by five years in the newest report because of the economy. A senior administration official said Medicare trust fund didn’t spend more than expected last year. Rather, high unemployment meant that the trust fund took in less money through payroll taxes.
This story was first posted at 1:09 p.m. and last updated at 3:48 p.m.