Social security and Medicare Essay Example Essay Example

Social security and Medicare Essay Example Paper Social security and Medicare Essay Introduction Nowadays, the Social Security of the United States of America is considered the largest single outlay that is supported by the United Sates Federal Budget. Judgments coming from many people have revealed that it is one of the most successful programs in the United States history. Social Security is a program wherein it covers almost all the population of the entire United States. The program, Social Security is able to provide retirement, disability and other benefits for the participants of the program. Social Security has to priority to provide retirement benefits to the elderly participants, thus, it aids in the reduction of poverty among these age group (Gokhale and Smetters, 2004).Medicare on the other is also a program provided by the United States of America which covers citizens with the age of sixty five and above. Medicare is a health insurance program which was first signed in to law by former President Lyndon B. Johnson.Economic Status of Social Security and MedicareAccor ding to annual reports (2007) of the Social Security and Medicare Boards of Trustees, the economic status of the Social Security and Medicare of the United States had continuously remained as problematic. Non-sustainability of the current financing system of the federal government which was given to the Social Security and Medicare of the United States is one of the reasons why economic problems had emerged for the two programs. In the near future, the excess income of the federal government derived from the tax income will begin to drop while the expenditures for the Social Security and Medicare are rapidly increasing. The Social Security expenditures is much lower than the costs of the government in maintaining the Medicare of the United States. Currently, the Medical Hospital Insurance Trust Fund will be expected to give more payment for the hospitals. The Medical Hospital Insurance Trust Fund will receive lesser income from tax and other revenues, thus, it will dedicate more exp enditures in the payment of hospital benefits.It was predicted by the Social Security and Medicare Boards of Trustees that in 2019, the funds for Medicare will be exhausted. For the Social Security fund, it was predicted that it would be worn out in 2041. Moreover, the trust fund that is responsible for paying the services rendered by the physicians and for the prescription of new drug benefit will be requiring general income. The payment for the Medicare Supplementary Insurance Trust Fund (for physicians) will come from the beneficiaries of the Medicare and this will also be rapidly increasing as the cost for the payment of hospital bills is also increasing (Social Security and Medicare Boards of Trustees, 2007). As the cost of the income of the trust funds that comes from the tax and other revenues are decreasing, the burden for the Medicare program as well as for the Social Security will be increased.As stated in the report of the Social Security and Medicare Boards of Trustees t here is 4.2 % of the GDP (Gross Domestic Product) of the Social Security benefits in 2006. The Gross Domestic Product incurred from the Social Security benefits was also predicted by the Social Security and Medicare Boards of Trustees to make an increment of about 6.2 % in the next decades (2030). The Gross Domestic Product of the Social Security benefits will then be again increased in 2081 by 6.3 %. In the report presented by the Social Security and Medicare Boards of Trustees, the projected insurance and premium deficit for 75 years showed that there is indeed an decrease in the taxable payroll of the combined Old-Age and Survivors and Disability Insurance Trust Funds.There is about 1.95 % of taxable payroll for the combined Old-Age and Survivors and Disability Insurance Trust Funds that was originally 2.02 % in 2006. The decrease is due to the fact that there were changes done in financing system. As shown in the analysis done by the Gross Domestic Product of the Social Security , there is a positive response regarding the short term test for financial adequacy. However, the long term test for financial adequacy had resulted in a negative response. It was also further laid out that in the predictions done for 2017 that there will be a little by little decrease in the funds that will be allotted for Social Security and in 2041, the program can only sustain a seventy five percent of the beneficiaries. The reason to explain these results is the fact that all the trust funds will soon reach the point of exhaustion (Social Security and Medicare Boards of Trustees, 2007).The economic condition of the Medicare program is worse than the economic condition of the Social Security of the United States. Social Security and Medicare programs are both facing demographic problems but there is a larger impact of the deficit in the Medicare program. The increase of health care cost is evident at older age which is one reason why there is a larger problem experienced in Medi care. Furthermore, it was projected by the Social Security and Medicare Boards of Trustees (2007) that there will be an increase in the allotted funds for the health care maintenance of the Medicare beneficiaries while the tax income and other revenues are relatively decreasing. The result of this situation was then be reflected by the Gross Domestic Product cost of Medicare program which had reached up to 3.1 percent in 2006. The equivalent of this Gross Domestic Product in terms of the Social Security is about seventy two percent and it was projected that the GDP for Medicare will exceed the costs for Social Security expenditures in 2028. Moreover, the GDP increment of the Medicare program will exceed the Social Security costs in 2048 by eleven percent.The analysis conducted by the Social Security and Medicare Boards of Trustees (2007) had presented that there is a negative response in the short term test for financial adequacy. The reason for the failure of the financial adequacy is that there is a continuous drop of annual assets versus the increasing annual expenditures. Moreover, there was also a failure of the long term test for financial adequacy when the Medicare actuarial deficit in the Hospital Insurance Trust Fund was analyzed. It was also projected that the Hospital Insurance trust Fund will reach the point of exhaustion in 2019 much earlier than the point of exhaustion by the Social Security. In 2019, the expected percentage which the Medicare program could only sustain will only be seventy nine percent of the total percentage of beneficiaries.With the problems of finance experienced by Medicare program, Part B of the Supplementary Medical Insurance Trust Fund and Part D will not experience the same deficit as experienced by the Medicare program. Part B is the one responsible for the payment of the doctor’s and the physician’s service as well as the payments allotted for outpatient’s expenses. Part D is the one responsible fo r the payment of the prescription drugs. The reason why there will be no deficit problems experienced in the Part B and Part D of the Supplementary Medical Insurance Trust Fund is because there was law that orders of the automatic financing provided for the program. Automatic financing will be done annually and this is to be able to provide f or the expected costs of the Parts B and D in the future years (Social Security and Medicare Boards of Trustees, 2007).Remedies for the economic problemsAs many of the reports had indicated the possible downfall of the Social Security and Medicare programs of the United States, solutions ad alternatives for the problem to be solve was also presented. In my point of view, the root of all the problems encountered by the economic stability problems of the federal government supported programs such that of the Medicare and Social Security are not only about demography but also the allocation and the financing system of the programs.The federal gove rnment is not only the one to blame of the decreasing collections from the revenues of taxes as well as the increasing trend in the payments for hospital benefits of the Medicare and the increasing payment in the benefits of the Social Security. There should have been a collaboration of the offices involved in the welfare of the two programs. As a suggestion, I would recommend that increase in the taxes should be imposed because there is also an increase in the payments of such benefits of the Social Security and Medicare. A more flexible and more sustainable financial arrangement should be implemented to be able for the problems of Medicare and Social Security to be solved.Parker (2004) had reported that the annual report of the Social Security and Medicare was estimated to have been incurring a total gap of about $50 trillion. This gap is should be able to be collected by the taxes and other revenues. These figures had been changed by the estimate done in Bush’s administrat ion that over the next seventy five years, there will be a gap of $18 trillion. It was presented that to be able to avoid for the financial crisis that is experienced by the Medicare and Social Security is for the citizens to be convert their lifestyles in a way that aging could still be prevented (Parker, 2004). Rejuvenation therapies are then recommended to be done by the citizens to be able to save some budget that will be used for the hospitalization payment of the elder people (which is handled by their Medicare).In this way, more resources will be able to save for important incidences and for future use. Likewise, this would be a great help to the looming financial disaster experienced by the budgets of the Social Security and Medicare programs. Change of immigration policies will also help in a way to reduce the burden of the financial problems (Parker, 2004). By implementing the new law f or immigration will help in the reduction of the citizens who are classified to have lo w income. By reducing the low income immigrants, low taxes paid by these immigrants will also decrease therefore, it will not add up to the low taxes paid for the revenues that will directly be allotted for the Medicare and Social Security. Social security and Medicare Essay Thank you for reading this Sample!