The federal health program, Medicare,will run out of cash in 2026,according to a government report fromthe system's trustees. That's 4 years earlierthan last year's prediction. TheSocial Security insolvency date was set at2042, a year later than the previous governmentforecast. Among the reasonsfor the change in the Medicare forecastare the rising health care costs, agloomier outlook on wages, and a possibleshrinkage in Medicare tax revenues.Although the dismal projectionsprovided fuel for the Bush administration'sattempts to reform the $250-billionhealth care program, the WhiteHouse downplayed that aspect of thereports, focusing instead on bolsteringthe confidence of current retirees thattheir Social Security benefits are safe.
The low-key response to the Medicarereport featured a statement fromUS Health and Human Services SecretaryTommy Thompson, who said, "The timehas come to modernize and improvethe Medicare program." US SenateFinance Chairman Charles Grassley (RIowa)said the report highlights theneed to find a way to control costs withouthurting benefits. In a recent speechto the American Medical Association(AMA), President Bush urged Medicarereforms that include a subsidized prescriptiondrug program and more choicesfor seniors, including options thatwould give them the same alternativesthat are available to members ofCongress and other federal employees.
The 40-year-old Medicare programcurrently consumes about 2.5% of theannual US gross domestic product, andis expected to climb to 5% by 2035. Bythat year, about 1 of every 4 Americanswill be age 65 or older.
Further complicating the matter, USphysicians recently survived a governmentattempt to cut their Medicarepatient treatment reimbursements forthe second straight year. In 2003, they'llget a measly 1.6% boost. According tothe AMA, more than 40% of doctors saythey will reduce or eliminate Medicarepatient load if future reimbursementissues are not resolved. More than 90%of US doctors treat Medicare patients.