Triggering a policy response to the Medicare funding warning

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  • #Medicare will fall short of its promises without reform

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Thank you, Chairman Gowdy, Ranking Member Davis, and members of the Subcommittee for the opportunity to speak today on Medicare's financial status and the need for a policy response to the funding warning issued by Medicare's Trustees in their most recent report.

I am Joseph Antos, the Wilson H. Taylor Scholar in Health Care and Retirement Policy at the American Enterprise Institute (AEI), a non-profit, non-partisan public policy research organization based in Washington, D.C. I am also a member of the panel of health advisers for the Congressional Budget Office (CBO), and I was formerly the Assistant Director for Health and Human Resources at CBO. My comments today are my own and do not necessarily reflect the views of AEI, CBO, or other organizations with which I am affiliated.

"Medicare will not be able to fulfill its promises to future generations of seniors without significant changes in policy." -- Joseph Antos

Because of Medicare's complicated structure, it can be difficult to ascertain fully the program's financial status. The date at which the Hospital Insurance (HI, or Part A) trust fund is exhausted is one easily-understood indicator but it focuses on only a portion of Medicare that accounts for less than half of program spending. Congress established a trigger mechanism known as the Medicare funding warning that reflects the combined financial condition of all parts of the program. It was intended to call attention to imbalances between Medicare spending and revenue specifically dedicated to fund the program. In the event of a funding warning, the President is required to present legislative proposals to Congress that would reduce program spending or increase program revenue (or both).

A Medicare funding warning has been declared by the Trustees every year since 2007. President George W. Bush responded by sending a proposal to Congress on February 15, 2008, but Congress failed to act on it.1 In each of his first three years in office, President Barak Obama has failed to respond to the funding warning.

It is essential that the president heed the clear evidence presented by his board of Trustees that Medicare's ability to finance the promises made to America's seniors is in jeopardy. It is equally essential that Congress act to shore up Medicare's finances, whether or not the president presents his own plan.

Joseph R. Antos is the Wilson H. Taylor Scholar in Health Care and Retirement Policy at AEI.

 

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