New Medicare Law Addresses Long-Term Finances, McClellan Writes

The new Medicare law includes government accounting changes, such as a modification that requires an annual assessment of the program's long-term liability, CMS Administrator Mark McClellan writes in a letter to the editor of the Wall Street Journal (McClellan, Wall Street Journal, 4/26). McClellan's letter comes in response to a Journal opinion piece by Jagadeesh Gokhale, a senior fellow at the Cato Institute, who suggested an "accounting convention" that allowed the Medicare trustees to count general revenue transfers as dedicated resources for two of Medicare's subprograms in their annual report "should be changed" because it allowed trustees to underestimate Medicare's true financial situation (California Healthline, 4/15). Next year, Medicare trustees will be required to assess whether Medicare will need "excess" general revenue financing within seven years, McClellan notes. If the trustees determine this is the case in two consecutive reports, the president and Congress must devise proposals to address the situation. McClellan writes that the law also includes provisions, including competitive bidding among private health plans and disease prevention programs, that aim "to help Medicare get more for what it spends" (Wall Street Journal, 4/26).