In a report, entitled “Controlling Health Costs and Improving Health Care Quality for Retirees”, EBRI makes the claim that Medicare’s unfunded liability is more than seven times that of Social Security, which is currently receiving heavy media and political coverage. Over the past 75 years, EBRI claims, Medicare’s unfunded liability is $28 trillion, compared to only $3.7 trillion for Social Security, according to a press release.
The study appears in EBRIs February Issue Brief , according to the group.
“Medicare’s financial problems are much more immediate-and more difficult to solve-than what the Social Security program will face in several decades,” said Dallas Salisbury, EBRI president, in a press release.
The report found that rising health costs are adding to the problem, and is rapidly becoming a national priority for both politicians and the general public. The figures that EBRI quotes on the issue are startling:
- Assets in the Medicare trust fund will start to decline in 2010, and will be gone within a decade, EBRI quotes the programs trustees as asserting.
- The number of people on Medicare is now 40 million, which is double the 1970 figure; it will nearly double again by 2030.
- Medicare is an increasing share of the federal budget: it is currently at 3%, will be at 5% by 2020, and will top 14% come 2080.
- Medicare will pass Social Security in term of spending in 2024, according to EBRI.
The report also points out that other problems with Medicare exist, the major one being the rise in health care costs over the past several years. In the first half of 2004, health care costs rose 7.5%, while the GDP only rose 5.9% in the same time frame, the study asserts.
In conclusion, the report says that without major changes, Medicare will become insolvent in 2019, well ahead of the Social Security insolvency estimate of 2042. The figure for Medicare was, only a year ago, 2026.