SOCIAL SECURITY AND MEDICARE PREDICTED TO RUN OUT OF MONEY SOONER THAN EXPECTED

WASHINGTON–Social Security and Medicare trust funds are expected to run out of money sooner than expected, a report released Tuesday shows.

The report, from the programs’ trustees, shows that expenses will exceed tax revenues for Medicare’s hospital insurance fund in 2017, two years earlier than was estimated in a 2008 report.

Social Security’s trust fund is expected to be exhausted in 2037, four years earlier than last year’s estimate. Social Security’s expenses are expected to outpace the program’s tax income by 2016. On a 75-year horizon, Social Security would need additional revenue equivalent to $5.3 trillion in today’s dollars to pay all scheduled benefits.

The report “once again reminds us that the longer we wait to address the long-term solvency of Medicare and Social Security the sooner those challenges will be upon us and the harder the options will be,” U.S. Treasury Secretary Timothy Geithner said in response to the data. The Obama Administration is using the report to further its push for health care-reform that would slow what have been skyrocketing cost increases.

“If we don’t take action to slow the growth in health-care spending both publicly and privately, we are going to find ourselves in a simply unsustainable position,” White House Press Secretary Robert Gibbs said in his Tuesday briefing. “Unless or until we address those rising costs through health-care reform, we’re risking the solvency of these programs in the future.”

President Barack Obama has in recent days been lobbying the health-care industry to find ways to cut costs, measures that could make funds held in trust for Medicare go further.

The trustees’ data shows Medicare’s financial problems are larger and more imminent than Social Security’s. Medicare has been hit hard as demand for public health programs increases alongside rising health-care costs.

Calling the report sobering, U.S. House Ways and Means Health Subcommittee Chairman Pete Stark, D-Calif., promised Congressional action to strengthen Medicare’s trust fund. “We have seen worse reports in years past and the Congress has always stepped in to strengthen the program’s financial footing,” he said in a statement.

Social Security’s challenges have been exacerbated by the ongoing recession, however that fund is expected to continue paying full benefits for almost 30 years while funding about 75% of benefits thereafter.

The cost of Social Security benefits represented 4.4% of gross domestic product in 2008 but is expected to rise to 6.2% of GDP by 2034.