Future Medicare Costs Will Be Enormous, Trustees To Report
The "unfinanced promises" of the Medicare and Social Security programs could eventually total more than $50 trillion, according to an annual report to be released Tuesday by the trustees of the entitlement programs, the New York Times reports. In a "major departure," according to the Times, the trustees will include in the report an estimate of the cost of Medicare and Social Security based on an "infinite horizon" -- expected costs and revenues projected into eternity -- instead of the usual 75-year cost outlook. Trustees found that, eventually, the total gap between the cost of promised benefits for the two programs and the revenues to pay for them will be close to $50 trillion. Last year, the Bush administration estimated that the long-term gap between cost and revenues would be $18 trillion over 75 years. The trustees' report also includes the federal government's first effort to estimate the long-term cost of the new Medicare law. Those projections are based on the calculations of CMS chief actuary Richard Foster, who estimated that the 10-year cost of the law would be $534 billion. One anonymous official who has seen the trustees' forecast said the cost of the new Medicare legislation, which includes a prescription drug benefit, would eventually reach more than $10 trillion. The 75-year cost is estimated to be $7 trillion.
Although long-range forecasts are "notoriously uncertain," federal officials and analysts agree that both Medicare and Social Security face "huge shortfalls" in the coming years, and the new report is "likely to intensify the political battle over entitlement programs for the elderly," the Times reports. An anonymous source said, "The numbers are huge, much higher than any of the other estimates that are out there." David Walker, comptroller general of the United States, added that even estimates based on the more traditional forecasting period of 75 years are "staggering." John Palmer, public trustee of Medicare and Social Security and dean of Maxwell School of public policy at Syracuse University, "strongly supported" the basing projections in the report on infinite horizon, the Times reports. However, Marilyn Moon, health program director of the American Institutes for Research and a former Medicare trustee, said, "Even going 75 years into the future is a wild guess. So many things can happen in health care between now and then" (Andrews/Pear, New York Times, 3/19).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.