May 12, 2011 / 11:29 PM / in 7 years

New assessment of Medicare to fuel budget debate

WASHINGTON (Reuters) - A financial assessment of two popular government programs for the elderly on Friday will likely reflect the impact of aging baby boomers and a slow economy, fueling debate over how they can be sustained.

Vice President Joe Biden hosts a meeting with congressional Republicans and Democrats at Blair House, May 5, 2011. REUTERS/Jason Reed

The report on the Medicare healthcare and Social Security retirement programs will show the recession and job losses hit the two programs hard and that will likely be reflected in key dates showing when the trust funds, particularly for Medicare, become exhausted.

“If the insolvency date for the hospital insurance trust fund does move up quite a number of years, that will clearly be grist for Republican critics,” said Paul Van de Water, a senior fellow at the liberal Center on Budget and Policy Priorities.

Representative Xavier Becerra, the top Democrat on the House Ways and Means Subcommittee on Social Security, said he expects the report to show the recession has hit everyone hard including Social Security, but that the program should not be brought into the current debate over the deficit.

“There is a growing consensus that Social Security has never contributed a penny to national debt and is not an appropriate target for deficit reduction,” he said in an interview.

Social Security appears to be off the table in current negotiations over reducing the $1.4 trillion deficit and $14.3 trillion debt. But Republicans in the House of Representatives are pushing to overhaul Medicare for future retirees. The proposal would give them a federal subsidy to purchase medical coverage from private insurers.

Republicans argue the change is needed because a recent analysis by the non-partisan Congressional Budget Office shows the trust fund will be depleted in nine years.

Friday’s “report will affirm that the recession and the increasing number of Baby Boomers has put a significant strain on both Trust Funds,” said Michelle Dimarob, spokeswoman for Republican Ways and Means Committee Chairman Dave Camp. “We have got to demonstrate that we are serious about shoring up these entitlement programs.”

Last year’s report by program trustees showed that Medicare will exhaust its hospital trust fund in 2029, 12 years later than had been forecast the previous year largely due to savings called for in President Barack Obama’s healthcare overhaul.

It also showed Social Security spending more in benefits than it collected in taxes last year and said the program’s trust fund would be exhausted in 2037.

Reporting by Donna Smith; Editing by Andrew Hay

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