MEDICARE: Trustees’ Report Says Solvency Of Plan Extended
The booming economy, coupled with cost-cutting steps contained in last year's balanced budget agreement, has "bought time for Medicare," the Washington Times reports. "[T]ighter controls on payments to health care providers have pushed back Medicare's insolvency date to 2008 from 2001, according to an annual report card issued yesterday" by the Medicare trustees (Burn, 4/29). According to the report, the Hospital Insurance Trust Fund, or Medicare Part A, has been bolstered by the combination of restrained expenditures and structural reforms accomplished by the Balanced Budget Act of 1997. Under the plan, the projected 75-year actuarial deficit was cut in half. "These outcomes are a direct result of the enactment of the Balanced Budget Act and the recent strong performance of the economy," said Treasury Secretary Robert Rubin, managing trustee. On a more pessimistic note, however, the report again sounded concern over the rapid increases in costs to the Supplementary Medical Insurance trust fund (Medicare Part B) (HCFA release, 4/28). Part B costs have grown 48% over the last five years and are expected to "outstrip Part A spending by the year 2015" (Rovner, CongressDaily, 4/28). Furthermore, Health and Human Services Secretary Donna Shalala warned that such estimates, good or bad, are not set in stone given the dynamic nature of the health sector of the economy. "It's almost impossible to project the costs of health care beyond five or 10 years because we don't know what technological breakthroughs will come along" (Stamper, Philadelphia Inquirer, 4/29).
OK, Now What?
In a Rose Garden speech yesterday, President Clinton expressed relief at the findings, but emphasized the work to be done. He said, "[T]he long-term prognosis for Medicare is stronger than it has been in over a decade. ... It shows we can honor our values and meet our most fundamental obligations, even as we balance the budget. However, these modest improvements only underscore the fundamental challenge we face." He went on to say he "look[s] forward" to the report of the National Bipartisan Commission on the Future of Medicare (release, 4/28). The commission, led by Sens. John Breaux (D-LA) and Rep. Bill Thomas (R-CA), "is expected to debate everything from changing the eligibility age to imposing higher premiums on more affluent beneficiaries. Its report is due in 1999" (Duff/McGinley, Wall Street Journal, 4/29). However, CongressDaily reports, the leaders of the commission yesterday "began lowering expectations for the group." Breaux said, "The good news is we've got an incredible group of experts. The bad news is we have an incredible group of experts." He added, "It's very difficult to get people who have those heartfelt positions to make a change" (4/28). "Given the fact that Medicare would have gone broke in 2001 in Congress hadn't acted, I'm pleased to note that Medicare's condition has been stabilized, but it's still losing money and it remains in financial trouble," said Bill Archer, Chair of the House Committee on Ways and Means (release, 4/28). The AP/Richmond Times-Dispatch reports that Social Security's trustees also released their report, saying that the program was good for "three extra years of full benefits for retiring baby boomers before a potential cash shortfall in 2032" (4/29).