WASHINGTON, May 13, 2011 /PRNewswire-USNewswire/ -- The Concord Coalition said that today's release of the annual Social Security and Medicare Trustees Report is a timely reminder of how important cost-saving reform of these two vital programs is to the nation's fiscal outlook. Concord urged lawmakers now deliberating long-term budget plans to focus the programs' growing costs, and the extent to which they will tap into general revenues, rather than rely on trust fund balances, which are a matter of internal governmental bookkeeping.
"No serious plan to address our nation's unsustainable fiscal policy can ignore the enormous pressure that Medicare and Social Security will place on the budget in the coming years," said Concord Coalition executive director Robert L. Bixby.
Today's report shows that Social Security and Medicare Part A are now in permanent cash deficits. In considering solutions, Concord reiterated that what matters to the budget and the economy is cash flows, not trust fund accounting. Trust fund balances simply record a claim on future general revenues. They record how much the government owes itself, but say nothing about how society will meet the growing fiscal burden reflected in the existing commitments of the programs going forward.
The Trustees Report identifies population aging and rising health care costs as the main sources of growth. The number of beneficiaries will greatly expand and they will be making greater use of health care services, which continue to grow faster than the economy.
"This dynamic must be accounted for in any fiscal plan, whether by spending cuts elsewhere in the budget, increased revenues, or reforms to slow the growth of Medicare and Social Security. We may well need to do all three. What we can't do is borrow our way out of the problem. That might work if we were dealing with a temporary spike, but the numbers show an expanding gap over time between promised benefits and dedicated revenues," Bixby said.
Furthermore, the Trustees' report almost certainly understates Medicare's imbalances. The trustees are required to assume that a 29 percent cut in doctor payments will be implemented in 2012, even though Congress continually acts to prevent such cuts. The report also assumes that the cost controls enacted in the Affordable Care Act will take effect exactly as written in law, although there is considerable uncertainty as to whether the productivity targets it established are sustainable over the long term. One illustration of the optimism inherent in these assumptions is that under a more realistic scenario provided by the trustees, costs in Medicare Part B would be nearly 30 percent higher in 2030 and over 100 percent higher in 2085.
The Concord Coalition is a national, grassroots organization dedicated to fiscal responsibility. Former U.S. Senators Warren B. Rudman (R-NH) and Bob Kerrey (D-NE) serve as its co-chairs and former U.S. Secretary of Commerce Peter G. Peterson serves as president. For more information, visit www.concordcoalition.org.
SOURCE The Concord Coalition