Democrats to Question Use of Tax Cut in Medicare Trust Fund
Democratic congressional leaders, backed by a report from Families USA, will hold a news conference tomorrow to "attack" President Bush's tax cut proposal, arguing that the plan would shorten the solvency of Medicare, the Washington Post reports. This new "ammunition" against the tax cut plans comes as the Senate is set to vote today on a measure that would place Medicare's budget in a "lockbox." The debate about the Bush administration's Medicare accounting centers around its consideration of the two parts of the program (Goldstein, Washington Post, 3/13). Part A, or the Medicare Hospital Trust Fund, helps pay for inpatient hospital care, home health, skilled nursing and hospice care, and is funded through the Medicare payroll tax. Part B pays for outpatient hospital care, doctors' visits and home health, and is "financed through a combination of beneficiary and general revenues" (Families USA release, 3/12). While past budgets have considered Part A "separate" from Part B, Bush's plan puts them together . In doing so, the administration has proposed that Medicare Part A be placed into a "contingency fund" that would allow it to be spent on other programs, a plan that was criticized by the House Budget Committee last week in a hearing with HHS Secretary Tommy Thompson(Washington Post, 3/8)
In its report issued yesterday, Families USA contends that the president's proposal would make Medicare Part A insolvent in 2010, 15 years earlier than currently projected and "just as the baby boom generation becomes eligible for Medicare." The report states that the plan "would divert $526 billion over the next 10 years out of [Part A] and those funds would become available to the government's general fund." In addition, the report estimates that Part A would lose roughly $173 billion in interest payments over the next decade. Ron Pollack, executive director of Families USA, said, "The president's budget plays a shell game with more than half a trillion dollars of Medicare funds. At the end of the game, the program's trust fund is bankrupted and the fund's losses help to finance almost one-third of the president's $1.6 trillion tax cut" (Families USA release, 3/12).
The Post reports that Families USA's analysis "was endorsed yesterday by Marilyn Moon, a leading health economist at the Urban Institute and former public trustee of the Medicare and Social Security programs." However, Chris Ullman, a spokesperson for the Office of Management and Budget, called the report "fiction," adding, "President Bush has not proposed, nor would he support, any plan that would worsen the financial security of Medicare." White House spokesperson Scott McClellan added, "Every penny of Medicare goes to Medicare under the president's plan" (Washington Post, 3/13). To read the entire Families USA report, go to http://www.familiesusa.org/pdf/medicarespecialreport.pdf. Note: You will need Adobe Acrobat Reader to view the report.
The Senate is set to begin this debate today, as it will vote on a House-passed bill to place "at least $388 billion in Medicare revenue" in a "lockbox" to be used only to "reform" the program, which includes adding a prescription drug benefit, the Wall Street Journal reports. But Senate Republican leaders "are getting skittish about locking away projected surpluses in the Medicare trust fund" because of the prospect of "higher domestic spending and the rising costs of proposed tax cuts." While Democrats want $526 billion to be placed in a lockbox, the Journal reports that $388 billion "is a significant sum and if locked away would make President Bush's 10-year budget plan much tighter." For these reasons, "the administration is "cool to the Medicare lockbox idea." Last week, Thompson told the House Budget Committee that the administration "doesn't believe [a lockbox] is necessary, but if Congress feels that is the way to go, we will support it" (Rogers, Wall Street Journal, 3/13).