ON-Lion Letter
Deteriorating Medicare finances will force the federal government to consider reforming the nation's health-care program for senior citizens, based on the April 2007 annual report of the Social Security and Medicare Trustees.  The report triggers a provision of the 2003 Medicare Modernization Act that requires the President to submit legislation that Congress must consider in an expedited manner.

"Medicare and Social Security need to be reformed," according to public trustee Thomas R. Saving, director of the Private Enterprise Research Center (PERC) at Texas A&M University in College Station, Tex., and a senior fellow of the National Center for Policy Analysis (NCPA) in Dallas.  The Lynde and Harry Bradley Foundation in Milwaukee supports both PERC and NCPA, both of which study entitlements reform in general and retirement security in particular.  Among others, The Heritage Foundation in Washington, D.C., to which Bradley also provides support, studies these issues, as well.

Medicare is promising more in benefits then the program has the ability to fund without an influx of outside revenues, according to the report.  The estimated unfunded liability of Medicare is $32.4 trillion over the next 75 years, and $74.6 trillion looking indefinitely into the future.  Medicare's prescription-drug program alone has an estimated unfunded liability of $8.4 trillion over the next 75 years -- nearly double that of Social Security.

Without reform, the deficits in the two programs eventually would absorb the entire federal budget.
"This means that if we are going to keep our promises to seniors, now and into the future, the federal government will have to stop doing just about everything else," Saving said.  "Alternatively, we will have to either raise taxes or significantly cut benefits.  Either option will be very painful."
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