“Medicare shouldn't be a political issue," said then-Governor George W. Bush at a presidential campaign rally in 2000. "It's time to reform Medicare." But as president, Bush was unable to deliver on that pledge, and Congress seemed disinclined to address the subject of Medicare either — even though projected spending growth is clearly unsustainable, thanks in part to the aging of the population. Spending on Medicare nearly doubled over the course of the Bush administration, hitting $431.5 billion in 2007, and the program’s financing is slated to run into major trouble by 2012. According to projections by the Congressional Budget Office, Medicare spending is expected to jump from 4 percent of the Gross Domestic Product in 2007 to 12 percent in 2050. Warned Health and Human Services (HHS) Secretary Michael Leavitt in February 2008: “Left unchanged, within 35 years Medicare would eat up every bit of the federal budget as we now know it.” In response to spending alarms triggered by a 2003 law, the administration proposed legislation to rein in Medicare spending, but Congress voted in July to shelve the effort. Jeff Nelligan, director of media affairs at the Centers for Medicare and Medicaid Services, told the Center that the Bush administration has tried hard to control the rate of Medicare spending, but said attempts to reform even the smallest piece of Medicare have met resistance from Congress.

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Former HHS Secretary Tommy Thompson has argued that only a bipartisan commission can navigate the politics to find a solution to Medicare. President-Elect Obama has said his administration plans to “reduce waste in the Medicare system — in part by eliminating subsidies to the private insurance Medicare Advantage program.” But he also said in late November that budgetary “reform” must be part of a stimulus package, leading some to speculate that systematic Medicare reform might get an earlier-than-expected examination from the new president.

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During the 2000 presidential campaign, George W. Bush referred to Social Security reform as the “test of presidential candidates” — a test he planned to pass by aggressively pushing his version of reform, without regard for the always touchy politics of Social Security’s finances. Experts agree the program demands changes to survive. “The baby boomers’ retirement, starting this year, ushers in a permanent shift to an older population — and a permanent rise in the cost of Social Security,” said the nonpartisan Concord Coalition. “Finding a cure for the challenges facing Social Security will require reduced benefits, increased revenues, or both.” The Government Accountability Office (GAO) has urged early action to ensure Social Security’s financial solvency and provide future generations with the same benefits as current retirees. The GAO has reported that trust funds supporting Social Security would be exhausted by 2042. In 2005, the president produced his plan, which would have partially “privatized” Social Security by allowing workers to invest a portion of their payroll taxes into private accounts. But Democrats were adamantly opposed to the privatization plan, so Bush managed only to form a study commission on Social Security that ultimately yielded no real solutions. The administration also spent $2.8 million to campaign for its unsuccessful privatization proposal. Congress seemed to have no appetite for seriously addressing Social Security’s finances, so no meaningful action has been forthcoming. Mark Lassiter, press officer for the Social Security Administration, told the Center “there is a need for reform and it must be done in a bipartisan manner.”

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Congressional Democrats, unwilling to negotiate with Bush on his reform proposal, have been banking on a Democrat in the White House to move ahead with Social Security reform. But the apparent choices aren’t getting any easier. President-Elect Obama’s choice to head the Office of Management and Budget, Peter Orszag, has been seen as a frank voice on the seriousness of Social Security’s problems and has written extensively on the subject. “The Social Security deficit can be eliminated only through different combinations of politically painful choices: tax increases and benefit reductions,” he wrote in 2005 with co-author Peter Diamond, in The Economists’ Voice, while serving as a Brookings Institution fellow.

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The number of backlogged disability claims at the Social Security Administration (SSA) more than doubled over the past decade, with those pending at the hearing level reaching 760,800 as of October 2008, according to an agency spokesman. The spike in applicants from an aging baby boomer generation, staff cuts, and management problems all contributed to a cumbersome operation; individual cases took an average of more than 500 days to process in 2007. In the meantime, hundreds of thousands of people pursuing disability claims have been forced to wait as long as three years, with some going into bankruptcy, losing their homes, or even dying while waiting for a result. As far back as 2001, the chairman of the Social Security Advisory Board acknowledged that “unless there’s fundamental change, we will soon see disruptions of service. The Social Security agency lacks the ability to handle existing workloads, and those workloads are bound to increase in the next decade.” The situation continued to deteriorate, despite continuous warnings and recommendations for improvement from the Government Accountability Office (GAO), especially in regard to issues with the SSA’s electronic claims processing system. A lack of funding compounded the problem; Congress appropriated an average of $150 million less for the agency than the Bush administration requested between fiscal years 2001 and 2007, while giving the agency a heavier workload. In an attempt to reform the system, the agency introduced its so-called Disability Service Improvement in 2006, but the GAO found that poor management, rushed rollout, and short staffing ultimately stunted the initiative, resulting in additional costs. Finally, in May 2007, Michael Astrue, the Social Security commissioner, appealed to Congress for additional funding to refine the disability program’s electronic systems and hire more judges to hear cases.

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Congress appropriated $150 million more to SSA than President Bush requested for fiscal year 2008. As a result, the agency was able to hire 190 new disability judges, open the National Hearing Center, eliminate more than 135,000 cases from its backlog, and implement a streamlined disability determination process.. The backlog total grew by 14,000 cases in FY 2008, but that was far less than the recent average growth of 70,000 cases a year. Additional money remains critical for continued success. As Commissioner Astrue pointed out in October 2008, “Many things we need to do, such as increase support staff and add new hearing offices, will not happen if Congress fails to pass an adequate appropriations bill by March.”

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