The 2006 Social Security Trustees Report, which includes the Medicare program, was recently released. The trustees projected the year 2040 as the depletion date of the Social Security trust fund versus 2041 in the 2005 report.
Thanks to the Greenspan Commission in 1983, the trust fund is running a surplus of Social Security taxes collected. Contributors include employees, their employers and the self-employed.
As in the 2005 report, the trustees still project 2017 as the year that the costs of the Social Security program will exceed its tax revenues. The trust fund is designed to address this estimated shortfall.
The New York Times ran a report (5/2/06) and the Washington Post a column (5/9/06) that ignored the non-partisan Congressional Budget Office,s projection of 2052 as the year for the depletion of the Social Security trust fund. This slip shrinks the context of Social Security,s future.
Further, the Post columnist wrote the bonds held by Social Security were “IOUs from the U.S. Treasury.” That is an odd description of such interest-bearing certificates.
In serious business journalism, bonds are called bonds. Apparently, such journalistic standards do not apply to the Post columnist,s coverage of Social Security.
The federal government is legally obligated to repaying the bonds in the Social Security trust fund. A default would be illegal and drop the credit rating for other government bonds.
The Times reporter and Post columnist also did a poor job of explaining the financial crisis facing Medicare, the government program that provides health care to Americans age 65 and up, plus some disabled recipients of Social Security. In the new report, Medicare,s hospital insurance trust fund is projected to run short of cash in 2018 versus the 2020 date projected by the trustees a year ago.
In brief, Medicare,s cash crisis is being driven by the rising cost of U.S. health care, which is exceeding the rate of inflation. For example, the Consumer Price Index (minus energy and food) rose at a 4.1 percent annual rate during the past three months versus a 5.2 percent annual rate of increase for medical care prices.
In 2003, the U.S. spent 15 percent of its gross domestic product on health care versus five percent in 1960, according to the Organization for Economic Co-operation and Development. Meanwhile, the U.S. lacks a national health care program for all of its citizens.
Canada spent 9.9 percent of its GDP on health care in 2003 compared with 5.4 percent in 1960. Crucially, Canada provides universal health-care coverage to its populace.
Corporate monopolization is one process driving up the cost of U.S. health care. When the federal government grants patent monopolies to pharmaceutical corporations, they hike by triple digits the prices of prescription medications that dominate the market place in the absence of competition from low-cost generic drug producers.
Such a process and not Medicare itself is helping to cause its projected shortfall of funds. Repairing the U.S. health care system is the solution for what ails Medicare and Social Security.
SETH SANDRONSKY is a member of Sacramento Area Peace Action and a co-editor of Because People Matter, Sacramento’s progressive paper. He can be reached at firstname.lastname@example.org