Economic Recovery and Medicare's Weakening Prospects

The Medicare trustees' annual report has set off another series of heated political debate about President Obama's health care law, as the program's estimated expiration date was announced to be 2024, five years earlier than was projected last year. The report suggested that the cause of the earlier expected date for the exhaustion of Medicare's funds was the lagging economy. According to a New York Times article on the report, "Payroll tax revenues, which provide most of the money for Medicare’s hospital insurance trust fund, were lower than expected last year because earnings were 'considerably lower than projected' and the economy was weaker than expected."
Robert Pear of the Times also commented: "The estimates...were immediately swept up into the already inflamed political battle over federal spending, debt and the future of entitlement programs," with Republicans insisting that the report showed the urgent need to shore up the finances of the Medicare program and with Democrats insisting that damage would have been worse if not for Obama's health care law.

Medicare and the Social Security program-- which moved its exhaustion date up one year, to 2036--together account for over one-third of federal spending. According to Pear, "It is inconceivable that politicians would allow either program to run out of money." However, the two public trustees, Charles P. Blahous III and Robert D. Reischauer, cautioned: “The financial shortfalls confronting both Social Security and Medicare are substantial and—absent legislation to correct them—quite certain.”

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