New Government Report Sees Baby Boomers and Economy Spelling Trouble for Social Security and Medicare

April 24, 2012 Facebook Twitter LinkedIn Google+ Senior Medicare Issues

Baby boomers and economy Social Security and Medicare

The Baby Boomer generation has fueled unprecedented growth and prosperity over the last several decades, but with an aging Boomer population and economic troubles, the tide is without a doubt changing.  The funds for Medicare and Social Security are growing closer to insolvency and at a quicker pace over the last few years than previously anticipated.  A U.S. Government report issued Monday, April 23rd, 2012 detailed the urgency and need for action for these long-standing social entitlement programs.

Much of the troubles with Medicare and Social Security are due to a troubled economy over the last 5 years reducing the amount of fund influx due to fewer payroll tax collections.  Also, the fact that more and more individuals are reaching retirement age as a result of the large numbers of individuals encompassed by the Baby Boomer generation.

The Social Security fund for the year 2012 will provide some level of subsistence to over 45 million individuals—these are record numbers.  Inasmuch, the government report estimates that as near as the year 2033 the fund will not be able to meet its current projected obligations.  Unfortunately, with each report, the year of fund insolvency appears to be dropping.

The Medicare program is expected to provide health coverage for disabled and senior individuals to the tune of 50 million in 2012.  The latest estimates from the government report have Medicare largest fund operating without adequate reserves by the year 2024.  Even more threatening, the Medicare fund that pays for disability benefits for millions of beneficiaries is projected to run out of adequate funding to meet its obligations as soon as the year 2016.

Back in the 1990s the handwriting was on the wall with projections that the Medicare Hospital Trust Fund would run out of money in as little as four years.  Those incidents put a big scare into Washington’s politicians causing them to actually compromise and figure-out a budget deal to get the program on the right track again.  Fortunately, the economy also improved at the time, helping provide additional payroll revenue thereby alleviating the need for drastic cutbacks then.

While the funds will still be paying benefits from the collection of tax revenue even when the future dates occur, that revenue will not be adequate to meet their total projected obligations.  Both of these funds must be somehow adjusted if they will be able to meet their payout demands—if not, there will need to be cutbacks to the beneficiaries.

Throughout the decades of the previous century, politicians have figured-out compromise plans to prolong the programs of both Medicare and Social Security.  With today’s extreme bipartisanship dominated Washington, we can only hope and pray some smart, farsighted and compromising negotiations will take place soon in order to save the entirety of these critical entitlement systems.

The two parties are currently at odds with each other, in particular, with regards to the Medicare system.  Each political party has its own ideas and methods for intervening in saving the medical insurance program.  Unfortunately, they both appear to be bound-up in each party’s respective ideological beliefs.

The Republicans and Mitt Romney believe privatization is the means to saving Medicare issuing a system of vouchers to allow beneficiaries to find and pay for their own insurance.  This method is also referred to as “premium support.”  Unfortunately, this means of saving the Medicare program money is projected to leave seniors with potentially thousands of dollars in unpaid medical expenses laid at their feet each year.   Republicans also want to increase the age of eligibility for Medicare enrollment from the current age of 65 to 67 years old, delaying participation in order to boost the overall insurance program funds.

The Democrats and President Barack Obama are not in favor correcting for the Medicare system anomalies by placing the burden on the backs of senior and disabled beneficiaries.  They are looking at ways to get the clinics, doctor offices and hospitals to become more streamlined and efficient at what they due, thereby helping cut the overall cost of healthcare. They are looking towards the new Affordable Care Act as a means toward driving costs lower in both the standard healthcare system and Medicare.

With time running-out and the Baby Boomers getting older each day, the number of beneficiaries that are going to be taking advantage of these entitlement programs is actually rather staggering. Projections are that by the year 2030, eighty million Americans will be participants of these programs.  Let’s hope our politicians are able to find the best solution—or combination of solutions—that are able to rescue an ailing entitlement system.