The President’s Budget and the Medicare “Trigger”

Publication Date: February 2008

Publisher: Center on Budget and Policy Priorities (Washington, D.C.)

Author(s): James Horney; Richard Kogan

Research Area: Health

Keywords: Health care costs; Retirement; Federal budget; Economic projections

Type: Report

Abstract:

The President submitted legislation to Congress that would ostensibly keep general revenues from covering more than 45 percent of overall Medicare costs in each year through at least 2013. Congress is supposed to consider the President’s proposal or a comparable proposal to avoid exceeding the 45-percent limit. Some have portrayed this “45-percent trigger,” mandated by the prescription drug legislation enacted in 2003, as necessary to address Medicare’s serious long-term financing problems. In fact, the 45-percent limit is an ideologically driven target based on a misleading measure of Medicare’s financial health; its primary effect likely will be not to strengthen Medicare’s financing but to take certain options for improving Medicare financing off the table.