WASHINGTON -- The strong economy has delayed the projected insolvency date of the Medicare trust fund by seven years, to 2015, and the Social Security fund by two years, to 2034, the Clinton administration said Tuesday.
It is the second consecutive year that stronger-than-expected economic growth has added new years of life to the retirement programs. Medicare, the health insurance program for the elderly and disabled, had been projected to run out of cash in 2001. Last year, that date was moved to 2008 and, this year, to 2015.The Social Security insolvency date, which was extended last year from 2029 to 2032, was moved in the latest projection to 2034.
Some experts speculate the good news will make lawmakers contemplating changes to Social Security and Medicare this year feel less pressure to rush into any dramatic changes.
"This means we have more time to work together. More time to plan. More time to build on the amazing progress we've already made," Health and Human Services Secretary Donna Shalala said in a statement.
However, she added, "Even though we have more time, we don't have a minute to waste. We must keep working for a consensus on how to protect and modernize Medicare."
The trustees of the two programs -- which include Shalala and Treasury Secretary Robert Rubin -- attributed the improvement in Medicare to not only the strength of the economy but also to cost-cutting agreed to by lawmakers in 1997 and to a crackdown on waste, fraud and abuse.
The stronger economic growth has helped Medicare and Social Security by holding unemployment near a 29-year low. Because more Americans are working, taxes deducted from workers' paychecks to support the programs have risen.
Low inflation also saves both programs money because yearly Social Security cost-of-living raises to retirees were smaller, and health care costs remained lower.