Time is Running Out to Save Medicare

Medicare will run out of money by 2024. The latest annual report from the trustees of Medicare and Social Security states bluntly that Medicare, along with Social Security, is headed for bankruptcy unless Congress acts soon.

This news should be a wake-up call for those who resist Medicare reform. Critics of the sensible reforms House Republicans passed under the Ryan Budget use scare tactics to falsely state that the Ryan plan threatens benefits. This rhetoric is dishonest enough, given that the explicit purpose of the plan is to save Medicare for future beneficiaries, and those aged 55 or older will see no benefits changes; however, reform opponents go even further by suggesting that the alternative is to leave Medicare unchanged. But this is a false choice. Unless we act, there may be no Medicare at all for future generations. Medicare's insolvency jeopardizes benefits not just for generations in the distant future but for our children and grandchildren.

The trustees write that "the financial shortfalls confronting both Social Security and Medicare are substantial and -- absent legislation to correct them -- quite certain...Elected officials will best serve the interests of the public if financial corrections are enacted at the earliest practicable time." In fact, time to act is running out even faster than previously believed. The Medicare crisis has been accelerated by the recession, and the trustees' projection of bankruptcy in 2024 is five years earlier than their estimate from just last year.

Elected officials and candidates using Medicare to score political points need to be honest about the consequences of inaction. The trustees report leaves no doubt that, absent reforms, the only options for saving Medicare are steep tax hikes or deep cuts to benefits.

The gap between promised Social Security and Medicare benefits and the funds actually available to pay for them is $56.4 trillion. As former Reagan adviser Brue Bartlett explains, "whatever amount you paid on your federal income tax return this year would need to be 61 percent more, now and forever, to pay all the Social Security and Medicare benefits that have been promised over and above the payroll tax."

Such tax increases are certainly not an option, and neither are significant benefits cuts. The Trustees Report makes clear that we must reform the system, and soon, to avoid drastic alternatives. House Republicans have passed a plan. It would be helpful if President Obama and Senate Democrats would join our effort or contribute their own ideas instead of just distorting and vilifying our solutions. The deadline to save Medicare is fast approaching.