Medicare fund exhausted in 2019

The U.S. Medicare Hospital Insurance trust fund will exhaust its assets in 2019 instead of the 2018 date forecast last year due to bigger payroll tax collections, a report from the fund's trustees said on Monday.

The Social Security trust fund also extended its exhaustion date by a year to 2041. Despite the slight improvement reported by the trustees, the Bush administration said the two popular programs for the elderly needed urgent reform.

"Without change, rising costs will drive government spending to unprecedented levels, consume nearly all projected federal revenues and threaten America's future prosperity," Treasury Secretary Henry Paulson said in a statement.
The Medicare report raised a "funding warning" that is meant to trigger congressional debate over trimming costs of the health care program, which faces huge strains from rapidly rising costs and the aging baby boom generation.

Also, the trustees projected Social Security outlays to outstrip tax income in 2017, the same date as forecast last year.

President George W. Bush said the new Medicare prescription drug program, which relies mostly on private insurers to deliver the benefits to seniors, should serve as an example during the Medicare reform debate, adding, "competition works, competition can lower price, and improve the quality" for beneficiaries.

Bush said the cost of delivering the Medicare Part D drug benefit turned out to be substantially less than originally estimated, but the report warned that financing for the drug program and other parts of Medicare will have to increase rapidly to match expected cost increases.

Paulson said time was of the essence for lawmakers to address the projected funding shortfall for the two programs. "The longer we delay, the larger the required adjustments will be -- and the burden of making those adjustments will fall more heavily on future generations," he said.