[Ache]

http://www.startribune.com/business/209640601.html

WASHINGTON (AP) -- The government said Friday that Medicare's giant hospital trust fund will be exhausted in 2026, two years later than projected last year, while the date that Social Security will exhaust its trust fund remained unchanged at 2033.

The latest projections were included in the annual report of trustees of the trust funds. The new report warned that despite the small improvement in Medicare, both it and Social Security face significant funding challenges as the giant baby boom generation continues to retire. Currently, 58 million Americans are receiving Social Security benefits.

"Under current law, both of these vitally important programs are on unsustainable paths," Robert D. Reischauer, one of two public trustees, told reporters at a news conference.

The reasons given for the improved financial outlook for Medicare were an overall slowdown in the rate of increase in health care spending, particularly on skilled nursing care, as well as lower projected costs for popular insurance plans available within the Medicare program.

[Plantagenet]

The Medicare trust fund, like the social security trust fund, is an accounting fiction. There is no medicare trust fund. All the trust fund is a record of how much extra tax was paid in the past----ie how much money got diverted into the general fund and spent on other things.

So Medicare and Social Security resemble peak oil in one important way----its not when the trust funds run out that matters----the important thing is when the expenditures begin to exceed the tax income.

Just as in the POD where problems start not when oil runs out but when demand exceeds supply, SS and Medicare are in trouble when spending outpaces tax revenue.

For social security we hit that in 2010. Obama's new 2% tax hike in SS taxes will help but may not be enough to solve the problem---we'll have to wait and see if the SS budget balances for 2013.

Medicare is the same thing----delaying the exhaustion of the trust fund to 2026 does't mean a thing---the key date is when spending outpaces tax revenue. And thats is going on right now.


Medicare spending exceed tax revenue right now----!