Social Security's financial outlook worsened slightly last year, but the program's financial difficulties pale in comparison to those of Medicare, according to the annual report to Congress of the trustees of both programs.
"Medicare's financial difficulties come sooner -- and are much more severe -- than those confronting Social Security," the trustees wrote in their report. The trustees predict that Social Security will reach insolvency in 2041, one year earlier than previously estimated. But the trustees say that by 2020, Medicare will be able to pay only 79 percent of what it owes in benefits. Total hospital trust fund income, including interest, will exceed expenditures only through 2012.
The trustees' report projects that Medicare Part B premiums will increase by 12 percent next year to $87.70, which follows a 17 percent increase this year to $78.20.
Treasury Secretary John Snow defended the Bush administration's focus on Social Security reform instead of Medicare, saying "The reason we're dealing with Social Security now is that it cries out for answers."
AARP Policy Director John Rother said, "Many seniors are going to be facing sticker shock in terms of the cost of their health care" this year.
For links to the trustees' reports on Medicare and Social Security, go to: www.cms.hhs.gov/publications/trusteesreport/default.asp?
For a New York Times article on the trustees' report, go to: www.nytimes.com/2005/03/24/politics/24social.html (Free registration required and article may no longer be available free of charge.)