Do nothing, U.S. Rep. Jon Runyan said, and the nearly 50-year-old Medicare program will vanish in eight years.
Runyan, a Republican representing parts of southern New Jersey, sounded that alarm during a May 4 interview with Michael Aron on NJTV’s "On the Record."
"I was elected to make those hard (decisions) and have those serious discussions, and kicking the can down the road and not having those discussions and putting ideas out there on how to solve them, and how to actually preserve these programs for future generations, ‘cause as we sit right now, Medicare, if we do nothing, will be gone in eight years, if we do nothing to it," Runyan said.
Medicare -- which provided healthcare coverage to 48.7 million Americans in 2011 -- is eight years away from ceasing to exist?
Not at all, PolitiFact New Jersey found.
One of Medicare’s two trust funds is set to run out of assets in 2024, but incoming tax revenues would still cover more than 60 percent of projected costs for decades to follow, according to estimates released in April by the trustees overseeing the funds.
The second trust fund is to remain on solid financial ground indefinitely, the trustees said.
Runyan spokesman Drew Fasoli told us the congressman meant to say that "‘Medicare as we know it’ would be gone and that as a consequence (there) could be a drop in the level of coverage."
Now, let’s discuss that fund in financial trouble.
The Hospital Insurance (HI) Trust Fund covers Medicare Part A, which includes inpatient care at hospitals. The revenues behind that trust fund primarily come from payroll taxes.
Any surplus revenues are credited to the trust fund in the form of government securities, which represents money the government owes itself. The trust fund also accounts for interest earned on those securities.
Starting in 2008, there haven’t been enough revenues to fully cover Part A costs, leaving officials to make up the difference by redeeming those securities and spending interest earnings. That process is slated to continue until the fund is exhausted in 2024.
Still, even after the HI trust fund is exhausted, tax revenues would still cover a portion of Part A expenses, starting at 87 percent of projected costs in 2024.
"The Trustees project that the share of HI expenditures that can be financed with HI dedicated revenues will decline slowly to 67 percent in 2045, and then rise slowly until it reaches 69 percent in 2086," according to the trustees.
It’s worth noting that the HI trust fund has faced a projected insolvency since nearly the time it was created, but lawmakers always have taken steps to prevent that from occurring.
Due to a different type of financing, the accounts within the second fund, known as the Supplementary Medical Insurance (SMI) Trust Fund, "will remain in financial balance for all future years," the trustees said.
That trust fund covers Medicare Parts B and D. Part B includes outpatient care and Part D relates to prescription drug coverage. Medicare coverage provided through private health plans -- known as Medicare Part C -- is financed by both trust funds.
The six trustees overseeing both funds include the Secretary of the Treasury; the Secretary of Labor; the Secretary of Health and Human Services; the Commissioner of Social Security; and two other members appointed by the president and confirmed by the U.S. Senate.
In a May 4 interview on "On the Record," Runyan claimed that "as we sit right now, Medicare, if we do nothing, will be gone in eight years, if we do nothing to it."
One of Medicare’s two trust funds is on track to no longer fully cover certain benefits, but the entire program is not facing extinction.
Even after that trust fund is exhausted in 2024, tax revenues would still cover more than 60 percent of projected costs for decades to follow. The second trust fund is to remain financially sound indefinitely.
We rate the statement False.
To comment on this ruling, go to NJ.com.