Medicare Trustees tell us to expect a Medicare Funding warning next year

Medicare Trustees tell us to expect a Medicare Funding warning next year

The Medicare Trustees released their annual report today on the health of the system, and as I speculated yesterday (May Day for Medicare?) they did indeed warn that Medicare is projected to cross a key threshold specified in the Medicare Modernization Act. If they make the same warning next year –which seems highly likely– there could be serious consequences.

From p. 27:

Total Medicare outlays, less dedicated revenues, are projected to exceed 45 percent of outlays in 2012… [T]he Board finds that a condition of ‘excess general revenue Medicare funding’ exists. A second such finding, in the 2007 Trustees Report, would trigger a ‘Medicare Funding warning.’

From p. 37:

[A Medicare funding warning] would require the President to submit to Congress, within 15 days after the date of the next budget submission, proposed legislation to respond to the warning. Congress is then required to consider this legislation on an expedited basis. This new requirement will help call attention to Medicare’s impact on the Federal Budget.

I’m glad this provision was inserted into the Medicare Modernization Act, and I hope that the Congress and the President use this ‘warning of a warning’ to bring Medicare spending under control. I’m not holding by breath, but I’m hopeful that the warning will hasten the necessary structural reform of the system. It all depends on whether the media and politicians are successful in using the warning to demonstrate that Medicare financing is a looming crisis, better dealt with sooner rather than later.

May 1, 2006

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