Entitlement reform Washington Post


Social Security and Medicare, the two largest portions of the federal safety net, continued to deteriorate in the last year, with the programs’ trustees projecting the combined Social Security retirement and disability programs will exhaust their trust fund three years sooner than previously thought. The trustees for the two programs said in their annual report that the long-run deficit projections for both Social Security and Medicare worsened over the last year, putting the onus on U.S. policy makers to address the problems sooner rather than later to avoid hurting seniors, low-income households and others who depend on the program. . . . The trustees said the single-year deterioration in the combined Social Security program’s long-term deficit was the largest since 1994.

Douglas Holtz-Eakin and Michael Ramlet from the American Action Forum provide some useful detail. They write: “In 2011, Medicare spent $549.1 billion on medical services for America’s seniors but only collected $260.8 billion in payroll taxes and monthly premiums. Trustees have now issued a funding warning for 7 straight years.” The bottom line: “ The cash shortfall is responsible for over one-fourth of the federal debt accumulated since 2001.”

Meanwhile, the Government Accountability Office put out its own report, telling the Obama administration to stop wasting $8.35 billion on a Medicare “experiment.” The administration’s “Quality Bonus Payment Demonstration” was a scheme to give bonuses to Medicare Advantage programs, largely offsetting the cuts to that program required by Obamacare. Phil Klein explains that “the Obama administration has not specifically explained how it is going to pay for the [bonus] program. Remember, savings from cutting Medicare are supposed to be used to finance the coverage expansions in Obamacare. The GAO writes that, ‘(White House Office of Management and Budget) officials told us that they considered the costs of the demonstration in the context of other administrative actions in the Medicare program that are expected to generate savings. However, they did not confirm whether specific offsets were identified to account for the total costs of the demonstration.’”

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