Changes are needed "very soon" to prevent the Medicare trust fund that pays for hospital care from going bankrupt as early as 2001, federal officials said Friday.

The Social Security Board of Trustees, in its annual report, said projected reserves and financing of the hospital insurance program will not keep up with greater demands that will be placed on the system by an aging population."Corrective action will be needed very soon in order to avoid the need for potentially precipitous changes later," the report said.

Health and Human Services Secretary Louis Sullivan said in releasing the report that it "underlines the urgency of our task in containing health-care costs and spending our health-care dollars more effectively."

These are nearly the same words the secretary used last year when the trustees' annual report said the hospital insurance fund could run dry before the end of the century.

Under the most likely economic and demographic assumptions, the Hospital Insurance Trust Fund will be depleted by 2005, according to the trustees report. More optimistic assumptions put trust fund exhaustion at 2018, while the worst-case scenario would put the fund out of business in 2001.

In its annual report last year, the trustees projected the fund could be depleted as early as 1999. With moderate economic growth, the fund was projected to run out of money between 2003 and 2005, and under optimistic conditions, it could last until 2018.

Currently, there are four workers paying into the system to support each Medicare beneficiary, but this ratio will shrink as the population ages. By the middle of the next century, there are projected to be two covered workers supporting each beneficiary.

But without further action the hospital insurance program is expected to run out of money even before the major demoPlease see MEDICARE on A2

graphic shift occurs, the report said.

Nearly all workers pay into the Social Security and Medicare systems through payroll taxes and can become eligible for their benefits.

The trust funds for the two main Social Security programs - Old Age and Survivors Insurance, OASI, and Disability Insurance, D.I. - will be able to pay benefits for about the next 50 years, according to the report.

Though the board recommended no changes in the overall financing or benefits of the two programs, it said the financial position of the D.I. fund needs to be strengthened.

The Supplemental Medical Insurance trust fund was described as being "actuarially sound," but the trustees said they were concerned about soaring costs.

Program costs have nearly doubled in the last five years. During that period, the program grew 37 times as fast as the economy as a whole, the report said.