Press Release
Wednesday, March 17, 1999

WASHINGTON -- The Concord Coalition today applauded President Clinton's decision to produce a Medicare reform plan this year and urged him to combine his Medicare proposal with specific Social Security reform options that Congress can consider as a total retirement security package.

"Conventional wisdom seems to be that the issues involved in Medicare and Social Security reform are so daunting that they must be dealt with separately," said Concord Coalition Policy Director Robert Bixby. "But they are closely related pieces of the retirement security puzzle. Logically, reforms of the two programs should be packaged together rather than viewed as if they were unrelated."

Concord emphasized that the challenge of preparing Medicare and Social Security for the 21st century cannot be met simply by relying on hoped-for budget surpluses. Structural changes will need to be made in both programs to ensure that they provide retirement security in a fiscally and generationally responsible manner.

"The President can demonstrate bold leadership this year by offering the nation a comprehensive retirement security proposal instead of piecemeal Medicare and Social Security options," said Bixby. "Dealing with these programs separately does not alter the fact that neither one is fiscally sustainable in its current form. While reforms may seem easier if considered in isolation, this is an illusion. What really matters is whether the total Medicare and Social Security benefits package is adequate, equitable, and affordable over the long-term."

According to the 1998 Social Security and Medicare Trustees' Report, the combined operating deficit for Social Security and Medicare Part A (hospital insurance) in 2030, when today's children will be entering their prime working years, will reach an inflation-adjusted $414 billion. A payroll tax rate of almost 24 percent -- almost double today's rate -- would be required by that year to pay currently projected benefits. That figure does not include Medicare Part B (supplemental medical insurance) which is 75% subsidized by general tax revenues. That subsidy, which amounted to $57 billion in 1998, is projected to rise to an inflation-adjusted $312 billion in 2030.