US healthcare report fuels debate on deficit
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President Barack Obama’s reforms will help the US Medicare system remain solvent for an additional 12 years from previous estimates, according to the annual report of the public healthcare programme’s trustees.
A parallel report from the trustees of Social Security, the federal public pension system, said that although the programme would dip into deficit this year it would remain solvent until 2037.
The release of the Medicare and Social Security reports will add fuel to the debate about the US federal deficit, which is likely to be one of the most contentious subjects in this year’s midterm elections to the House of Representatives and the Senate.
The White House says that its healthcare reforms, which were signed into law earlier this year, will help restrain costs in future, and points to estimates by the non-partisan Congressional Budget Office and others. But Republicans have criticised projections of solvency, saying they are based on unrealistic assumptions.
Thursday’s reports said that Medicare, which provides healthcare for the elderly and disabled, would now be solvent until 2029 compared with its previous estimate of 2017. Social Security, though dipping into deficit this year for the first time in more than a quarter of a century because of declining tax revenues, is projected to run out of money in 2037, the same date as forecast in last year’s trustees report.
Tim Geithner, US Treasury secretary, said that healthcare reform was instrumental in controlling the deficit. “This new law gives Americans more control over their healthcare decisions, ends insurance company abuses and will bring down health care costs over the long term,” he said.
The impending retirement of the post-war “baby boom” generation over the next few years is likely to push Social Security revenues permanently below expenditure. A bipartisan fiscal commission created by Mr Obama will make recommendations by December 1 on how to balance the primary deficit (excluding interest payments) by 2015 and put the long-run entitlement spending on programmes such as Medicare and Social Security on a firmer footing.