Medicare is in crisis now

Democrats and Republicans are both to be faulted for the emerging positions of their parties on the need for Social Security reform.
Democrats seem to be increasingly inclined to take the view that there really isn't much of a problem with Social Security -- any crisis is decades away. The flaw in that thinking is that the longer Congress waits to take action, the higher the cost.
Republicans, on the other hand, at least those most loyal to President Bush, are pushing the concept of "ownership" as a necessary part of Social Security reform. But personal accounts do nothing to address the shortfalls Social Security will face as the number of retiring baby boomers increases. Indeed, diverting Social Security payroll taxes to personal accounts will inevitably require adding trillions of dollars to the national debt and reducing traditional Social Security benefits, especially in the area of disability coverage.
But both miss the immediate crisis, which is not in Social Security, but in Medicare.
How bad is it?
A report by the Social Security and Medicare Boards of Trustees reaffirmed that the cost of Social Security benefits will exceed the tax revenues that pay for them by 2017. The IOU bonds built up to pay for benefits after 2017 will be exhausted by 2041.
But the report added, "Medicare's financial outlook has deteriorated dramatically over the past five years and is now much worse that Social Security's."
Medicare actually went into deficit last year, and the date its trust fund of accumulated IOU bonds will be exhausted is 2020. In other words, the crisis that everyone wants to head off for Social Security is already here for Medicare. The cost of Medicare, about 2.3 percent of GDP today, rises in a straight line to almost 14 percent of GDP in 2080.
The White House has been saying that if Social Security isn't repaired, we'll have to come up with $11.1 trillion to pay Social Security benefits indefinitely. For purpose of comparison, that same figure applied to Medicare is $65.4 trillion.
Certainly, Social Security must be fixed, but those fixes will be meaningless to poor and middle class senior citizens if Medicare isn't saved first. Congress has to start talking about Medicare now, and it should begin by revisiting the flawed prescription drug bill that was pushed through in 2003.