Medicare is under intense scrutiny from the Democratic Congress, driven by recent policies that have increased program spending. The new Part D drug benefit is popular with seniors, but expensive to taxpayers. Democrats argue that the prices of Part D pharmaceuticals are too high and that direct government negotiation would rein in the cost of the program. The Medicare Advantage program, which offers private health plans as a substitute for traditional Medicare, is criticized because payments to the plans exceed the cost of providing standard benefits under the traditional fee-for-service program. These and other developments have increased Medicare spending in the near term, and have exacerbated the long-term financing problems facing the program over the next few decades. Although there have been positive developments, including lower spending in Part D than initially projected, the fiscal outlook for Medicare is grim. Will competitive approaches improve the operation of Medicare and slow the growth of program spending? Will policymakers be forced to take drastic actions triggered by a worsening financial outlook?

The annual Medicare trustees’ report, to be released April 23, provides the latest assessment of Medicare’s fiscal future. Richard Foster, Medicare’s chief actuary, will present this year’s findings. Thomas Saving, a public trustee for Medicare and Social Security, and coauthor of the new AEI Press book The Diagnosis and Treatment of Medicare; and John Palmer, also a public trustee, will provide their interpretations of the report and the policy problem. Robert Reischauer, former director of the Congressional Budget Office (CBO); Jeanne Lambrew, former budget official in the Clinton administration; and AEI’s Joseph Antos, a former official with CBO and the Centers for Medicare & Medicaid services, will discuss the policy challenges facing the program.

This is the first part of a health policy double feature to be held at AEI on April 24. Following the Medicare panel, secretary of the Department of Health and Human Services Michael Leavitt will deliver a major policy address on promoting health insurance for children and all Americans. Please register for the second event separately at www.aei.org/event1502.