The imminent collapse of Social Security and Medicare: Truth or propaganda?

Robert Reich, center, with President Obama

Source: Zimbio

Predictions of the imminent collapse of Social Security and Medicare are so common that the messengers risk being seen as boys who cry wolf. Evidently the media doesn’t worry about this, since they proceed to raise our collective anxiety level on this issue at every opportunity.
On May 12, the Social Security and Medicare trustees released their annual forecast. The latest projections, revised to allow for the current economic downturn, estimate that Medicare’s trust money will be gone two years sooner than expected (2017), and the Society Security trust fund will expire in 2037, four years sooner than the previous forecast. The most common headline was: “Medicare and Social Security Face Insolvency.”
For a level-headed take on the latest predictions, I recommend a post by Robert Reich, The Truth behind the Social Security and Medicare Alarm Bells. Reich was Secretary of Labor under Bill Clinton and a member of President Obama’s Transition Economic Advisory Board. He points out that the latest predictions are based on conservative assumptions about the economy’s rate of growth. If you look back over the last 150 years, including the Great Depression and the serious depressions of the late 19th century, the average annual growth rate has been 3 percent. If you assume 3 percent growth, Social Security can hang on for another 75 years.

He also points out that the Baby Boom generation, “moving through the population like a pig through a python,” is offset by the increase in immigration. Immigrants tend to be young, and the legal ones will be paying Social Security payroll taxes. There are also other solutions to the Social Security problem: raising the ceiling on wages subject to the Social Security tax, means testing recipients, or a modest increase in retirement age.
Medicare is a different animal. It’s in trouble for the same reason all health care is in trouble: The rate of growth of medical costs is steadily rising. However, if current health care reform includes a government-run (public option) health plan, in addition to the current offerings of the insurance industry, the government will have considerable bargaining power to control rising costs and even reduce prices. Reich:

Don’t be confused by these alarms from the Social Security and Medicare trustees. Social Security is a tiny problem. Medicare is a terrible one, but the problem is not really Medicare; it’s quickly rising health-care costs. Look more closely and the real problem isn’t even health-care costs; it’s a system that pushes up costs by rewarding inefficiency, causing unbelievable waste, pushing over-medication, providing inadequate prevention, over-using emergency rooms because many uninsured people can’t afford regular doctor checkups, and spending billions on advertising and marketing seeking to enroll healthy people and avoid sick ones.