Are Medicare reforms on the horizon?

For at least a decade, thetrustees who monitor Social Security and Medicare have called forchanges to ensure the programs’ long-term financial health.  At least on Medicare, Congress may take action this year, but it’s not likely to be what the Bush administration wants. Without significant changes, the trustees warn, the payroll-financedtrust fund for Medicare’s hospital coverage will be exhausted in 12years, and the fund for Social Security benefits in 34 years. After that, both programs still would have enough tax money coming in to pay 75 percent or more of expected expenses. Both programs could be made financially solvent by increasingpayroll taxes: 1.95 percentage points for Social Security and 3.55percentage points for Medicare. Together, that would raise payrolltaxes from 15.3 percent to 20.8 percent. That solution is considered politically impossible in the current atmosphere. But so is cutting benefits.  Few expect action on Social Security.Even President Bush, who invested a considerable quantity ofpolitical capital in 2005 in an unsuccessful effort to restructureSocial Security with private investment accounts, seems to have givenup.  “I’ll keep pushing, but I don’t think it’s going to happen,” Bush said recently on PBS’ “The Charlie Rose Show.”  That makes Medicare the more likely playing field this year.  Its problems are both more immediate and more serious in the longrun. Recently, a provision of the 2003 Medicare Modernization Act wastriggered requiring the president and Congress to consider ways toreduce the share of Medicare funding that comes from general revenue.

Source:  Atlanta Journal/Constitution, http://www.ajc.com/business/content/business/stories/2007/05/01/0501bizmedicare.html

Ed:  I’ll believe it when I see it.