Overlooked Element of Medicare Trustees’ Report Could Spell Trouble For Beneficiaries in Future Years

Publication Date: April 2004

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

Author(s): Richard Kogan; Robert Greenstein; Edwin Park

Research Area: Health

Keywords: Prescription drugs; Elderly; Health care costs; Economic projections

Type: Report

Abstract:

The report that the Social Security and Medicare trustees issued March 23 on the state of Medicare’s finances contains a key “finding” that has been largely overlooked in initial discussion and media coverage of the report. The Medicare drug law enacted last December contains a provision requiring the trustees to estimate in each of their annual reports the point at which general revenues will finance at least 45 percent of Medicare costs. Once the trustees estimate in two successive reports that this 45-percent level will be reached within the next six years, the President is required to include a proposal in his next budget — and to submit legislation within 15 days of the budget’s release — to alter Medicare so the 45-percent threshold will not be exceeded. The Congressional committees with jurisdiction over Medicare must then report the President’s proposal or other Medicare legislation by June 30.