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Cain

"Current projections indicate that Medicare will go bankrupt by 2017, while Social Security will bottom out by 2037."

Herman Cain on Tuesday, October 4th, 2011 in

Cain says Medicare, Social Security in financial trouble

You can’t accuse Herman Cain of lacking confidence.

Metro Atlanta’s Republican hopeful for president ran for the U.S. Senate in 2004 without a lick of experience as an elected official. Now he’s running for president without ever having served in public office. His new book, "This is Herman Cain!: My Journey to the White House," treats victory as a foregone conclusion.  

Already, he’s referring to himself as "President Herman Cain."  

It’s in more than a few places, including the title of Appendix A, "The Major Issues of the Day, According to President Herman Cain." And President Herman Cain does not like what he sees. Entitlements, he said, are compromising the nation’s financial stability.

"Current projections indicate that Medicare will go bankrupt by 2017, while Social Security will bottom out by 2037," Cain said.

These figures -- especially the Medicare estimate -- seemed awfully pessimistic. 2017 is only six years away.

We contacted the Cain campaign and received no response, so we did our own research. We found that FactCheck.org, another fact-checking group, looked at similar statements. Cain’s campaign website also offered some clues. His policy page makes an almost identical claim, citing a May 2009 article in Newsweek as support.

The op-ed is by columnist Robert J. Samuelson, who argued that Medicare, which provides health care for seniors, and Social Security, which provides retirement income, will have to go bankrupt before lawmakers take funding problems seriously.

Samuelson said current projections show those programs will go bankrupt in 2017 and 2037, the dates when the "trust funds" that back them are slated to run dry. Those are the same years Cain cited.

First, we’ll deal with Cain’s statement that projections show Medicare will go bankrupt by 2017.

FactCheck.org wrote in 2009 about a nearly identical claim made in a TV ad for Americans for Prosperity, where Mark Block, the Cain campaign’s chief operating officer, used to work. It checked another in April by U.S. Rep. Paul Ryan, R-Wis.

As FactCheck.org concluded, Medicare does have big financial problems, but there’s no reason to think it’s going out of business.

There are four parts to Medicare, and they’re funded by two separate trust funds run by the federal government.

Part A covers inpatient hospital care, home health care, and services at skilled nursing facilities and hospices. It’s paid for by the Hospital Insurance Trust Fund, which collects most of its money from federal payroll taxes.

Part B covers doctor visits and other outpatient costs, while Part D covers prescription drugs. The Supplementary Medical Insurance Trust Fund pays their bills, which are mostly covered by the federal government’s general fund and premiums.

Medicare Advantage, or Part C, gives recipients the option to receive care through private insurers. It doesn’t have a trust fund.  

FactCheck.org’s articles said that the SMI fund is in good shape, and we found it still is. It’s "projected to remain in financial balance for all future years," according to a 2011 report by the fund’s trustees

But the the Hospital Insurance Trust Fund? Not so much. As of this year, it’s expected to be exhausted by 2024, according to midrange assumptions. If conditions worsen, the trust fund will run out by 2016.

This is better than the 2009 projections, where trustees expected funds to dry up by 2017, according to midrange assumptions. That’s the same date that Cain used.

Still, as bad as the news is about the hospital insurance fund, FactCheck.org decided it didn’t truly signal bankruptcy. The fund is only a portion of Medicare. The remainder is solvent for the foreseeable future.    

It’s also worth noting that Congress has always pulled the hospital insurance fund from the brink of insolvency. According to a Congressional Research Service report, in 1970, the insolvency date was 1972. For the next 16 years, trustees expected its funds to be exhausted by the 1990s. Congress repeatedly changed legislation to lower fund spending and keep it from going dry.

Now, let’s deal with Cain’s claim that Social Security will "bottom out" by 2037.  

There are two Social Security trust funds: Old-Age and Survivors Insurance, which pays for benefits to retired workers, their families and to families of deceased workers; and Disability Insurance, which pays for benefits to disabled workers and their families.

In 2009, midrange projections by the Social Security Board of Trustees said these trust funds combined will be exhausted in 2037, while the Disability Insurance fund will be gone by 2020.  The outlook worsened this year. The Disability Insurance fund will be exhausted in 2018. Combined, their assets will be exhausted by 2036.

When those funds run dry, Social Security will struggle to pay out benefits as promised, according to trustees.  

Cain’s information was based on a 2009 op-ed. He got that year’s data correct, and projections have not changed dramatically since then.

But while it’s fair for him to say that Social Security will "bottom out" by 2037, saying Medicare will go bankrupt by 2017 is a bit extreme. Only one of Medicare’s funds is expected to be exhausted by that date, and Congress has never let it run dry. Lawmakers have bailed out the fund without fail for 40 years.

Since Cain’s statement is partially accurate but leaves out important details about the Medicare trust fund, it meets our definition of Half True. 

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About this statement:

Published: Friday, October 14th, 2011 at 6:00 a.m.

Subjects: Health Care, Medicare, Social Security

Sources:

"This is Herman Cain!: My Journey to the White House," released October 2011

Herman Cain for President website, "The Issues," accessed Oct. 3, 2011

Newsweek, "Let Them Go Bankrupt, Soon," May 22, 2009

FactCheck.org, "Ryan’s Muddy Medicare Claims," April 19, 2011

FactCheck.org, "Going Out of Business?", Oct. 7, 2009

Social Security Administration, A Summary of the 2011 Annual Reports, accessed Oct. 3, 2011

The Boards of Trustees, Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds, 2011 Annual Report, May 2011

The Boards of Trustees, Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds, 2009 Annual Report, May 2009


Centers for Medicare & Medicaid Services, "How is Medicare Funded?" September 2009

Congressional Research Service, "Medicare: History of Part A Trust Fund Insolvency Projections,"  May 27, 2009

The Board of Trustees, Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds, 2009 Annual Report, May 2009

The Board of Trustees, Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds, 2011 Annual Report, May 2011

Written by: Willoughby Mariano
Researched by: Willoughby Mariano
Edited by: Jim Denery, Jim Tharpe

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