Medicare Part A Surplus May Be Needed to Balance Budget
With the slowing economy "squeezing" federal revenue, Office of Management and Budget Director Mitch Daniels said yesterday "for the first time" that the federal government may have to "tap" the Medicare Part A trust fund in order to avoid a deficit, the Los Angeles Times reports. He added that the 2001 budget surplus may be as much as 40% less than the $275 billion forecast earlier this year. Daniels said that the government would not have to dip into Social Security funds, but he could not say for certain that the budget could be balanced without using some of the Medicare surplus. Daniels said that move would pose "no threat" to the program, adding that the administration "is committed" to using surplus funds in Medicare Part A -- which funds hospital, home health, skilled nursing facility and hospice care costs -- "solely to pay for other Medicare expenses" (Brownstein, Los Angeles Times, 7/12).
This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.
Although the issue has "little or no economic significance," the political ramifications "could be substantial," the New York Times reports (Stevenson, New York Times, 7/11). Democrats, including Senate Budget Committee Chair Kent Conrad (D-N.D.), have accused President Bush of "raiding" the Medicare trust fund to finance his 11-year, $1.35 trillion tax cut (Los Angeles Times, 7/12). Democrats have sought to reserve Medicare and Social Security surpluses for debt reduction and may use Daniels' announcement to "portray Bush's tax cut as too expensive and to cast themselves as guardians of fiscal restraint" (New York Times, 7/12). However, Sen. Pete Domenici (R-N.M.), ranking member of the Senate Budget Committee, said, "For those who think it's the tax cut that caused the problem, if there is a problem, I submit it's the tax cut which may save us. The tax cut may, indeed, make this economy grow again quicker and to grow more" (Deans, Cox News Service/Atlanta Journal Constitution, 7/12). Daniels will testify about the budget outlook today at a Senate Budget Committee hearing (New York Times, 7/12).