MEDICARE: Trust Fund Reprieve May Blunt Reform Momentum
Yesterday's CNN report that the Medicare trust fund's bankruptcy has been pushed back was confirmed yesterday, as the White House announced that the program's solvency will extend to 2015 thanks to a surging economy, 1997 budget cuts and a crackdown on fraud. The temporary reprieve for the program, which had been projected to go bust in 2008, was met with equal measures of celebration and trepidation, as the president and legislators worried that the positive news would blunt the momentum for reform. Senate Finance Committee Chair William Roth (R-DE) said, "We cannot let this good news make us complacent" (Rosenbaum, New York Times, 3/31). President Clinton, speaking at a Rose Garden press conference, said, "We should not be lulled into thinking that nothing more needs to be done" (Goldstein, Washington Post, 3/31). He added, "Now is the time to make those changes. Now when our economy is strong, now when our people have renewed confidence and now when we have time on our side so that modest changes today can have major impacts in the years ahead" (New York Times, 3/31).
Death of Reform
Some predict, however, that the diminished immediacy of the program's funding crisis would effectively kill reform efforts. "I think it probably will guarantee that we will do nothing this year," said "longtime budget expert" Rep. Charles Stenholm (D-TX). Other pessimistic reax:
- Former HCFA head Gail Wilensky: "I'm afraid (the new forecast) will just postpone our day of reckoning" (Washington Post, 3/31).
- Rep. Benjamin Cardin (D-MD): "This puts the last nail in the coffin of doing Medicare reform this year" (Hosler, Baltimore Sun, 3/31).
- Former Clinton policy advisor William Galston: "It further diminishes the already shrinking chances of any action by the Congress in the next year or two" (Lambro, Washington Times, 3/31).
- Former CBO director Robert Reischauer: "This seals the fate of Medicare reform for the next couple of years" (Dodge, Dallas Morning News, 3/31).
Behind the Numbers
Behind the seven-year extension:
- Recent economic growth has pushed unemployment down to 4.4%, increasing the payroll taxes which are the Medicare trust fund's primary source of revenue;
- 1997 Balanced Budget Act cuts also raised more money than expected, with cuts in payments to skilled nursing facilities exceeding estimates by $7 billion;
- Justice Department crackdowns on provider fraud have "returned $1.2 billion in fines and repayments over the last two years" (Los Angeles Times, 3/31).
HHS Secretary Donna Shalala attributed the success to "hard work, courage and skill" (Koffler/Caruso, CongressDaily, 3/30). She added, "We didn't get here just by riding a very strong economy. It took very sound management" (Sun, 3/31). The report from the Medicare trustees used "quite conservative" economic estimates in its projections, estimating "that economic growth between 2010 and 2050 would average less than 1.5% a year" (New York Times, 3/31). 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.