The annual report card is coming out today on the health of Medicare and Social Security, but Iowa Senator Chuck Grassley says he already knows the prognosis — and it’s not good. Grassley says he expects to hear of another "Medicare Funds Warning" being issued, as the program is again falling into poor condition, financially.
Grassley says, "This is triggered by a requirement in the 2003 Medicare legislation and it’s supposed to trigger in when more than 45-percent of the money comes from non-payroll money." Grassley, a Republican, says the sooner Congress acts to avoid a Medicare crisis, the better, saying it would prevent the need for more drastic measures down the road. He says Medicare and Social Security are huge drains on the federal budget — and they’re continuing to worsen.
Grassley says: "These programs take up 40-percent of the budget, more than eight-percent of our G-D-P (gross domestic product) and it’s a social compact we have with the people. We’ve gotta’ keep these programs going but they can’t keep going the way they are if our grandchildren are to have them." It’s forecast that Medicare may exhaust its trust fund by 2019 due to soaring medical costs, while Social Security may be able to stay above water through the sale of Treasury Bonds through 2040. Grassley says immediate action could help extend the programs by many more decades.
Grassley says: "If nothing’s done, cash flow is only going to bring in 70-percent of benefits. That’s what’s wrong. Our grandchildren are going to get 70-percent of benefits and people my age are going to get 100-percent of promised benefits. That’s why it’s necessary to do something and the sooner it’s done, the easier it’s going to be for everybody."
Retirement is looming for some 78-million Americans in the Baby Boom generation. As for possible remedies, Grassley says they’ve already increased the payout for full benefits on Social Security from age 65 to 66 and it’ll go to 67 in a few years — he says the same thing may need to be done with Medicare. He says other options include increasing payroll taxes, changing other benefits, and making higher-income people pay higher premiums.