Four years of a Medicare Funding Warning, zero years of Obama action
posted at 1:30 pm on March 1, 2012 by Steve Eggleston
Rep. Paul Ryan (R-WI), chairman of the House Budget Committee, and Sen. Jeff Sessions (R-AL), ranking member of the Senate Budget Committee, fired off a letter to the White House in the wake of the fourth consecutive year of the Obama Administration’s decision to not address the now-current funding crisis of Medicare in violation of law. From the press release announcing the letter:
“Within fifteen days of presenting his budget plan, the President is required by law to send a legislative proposal to Congress to address Medicare’s looming insolvency. For four straight years, this ‘Medicare trigger’ has been issued. And for four straight years, President Obama has ignored the alarm and fled his post. America’s debt, as measured by the International Monetary Fund, is now worse than Greece on a per-capita basis. The course President Obama has laid out leads to fiscal ruin. His budget plan raises taxes by $2 trillion, increases the debt by $11 trillion, and increases spending by $1.6 trillion.
“The President’s unserious approach to Medicare will have serious consequences for seniors. President Obama continues to ignore his legal and moral obligations to protect the health security of America’s seniors. While he refuses to advance credible solutions to strengthen Medicare, the President’s health-care law does great harm to this critical program – raiding Medicare by over $500 billion to fund a new open-ended entitlement, while leaving the fate of seniors’ care to a board of 15 unelected bureaucrats in Washington. There is a growing bipartisan consensus on how best to preserve the Medicare guarantee, but the President won’t join this discussion. The President is required by law to respond to the Medicare Trustees’ annual warning, and – as a matter of fundamental leadership – is duty-bound to do so.
“Meanwhile, the Democratic leaders in the Senate refuse to bring a budget plan to the floor for the third straight year. The livelihoods, savings and futures of millions of hardworking Americans are at stake, but the President and his party’s leaders can’t even be bothered to fulfill their most basic obligations in a time of crisis.”
A bit of background is in order – as part of the creation of the Medicare Part D prescription drug benefit, a reqirement was put into place requriring, if the Medicare trustees find in two consecutive years that general funds, be they interest on the Treasury securities held by three “Trust Fund” accounts held by Medicare, redemptions of same, or other “general fund” revenues, do, or will within 6 fiscal years, comprise more than 45% of total Medicare outlays (or once the Hospital Insurance Fund was depleted, the “dedicated” funds are less than 55% of total obligations whether fulfilled or unfulfilled), the President to submit to Congress legislation to deal with said excessive general funding within 15 days of submitting the following year’s budget.
The first year the trustees found that situation becoming a probability based on the “intermediate-case” scenario was 2006, with FY2012 projected to require more than 45% of Medicare’s outlays come from the general fund. This imbalance was projected to arrive despite a pending reduction of physician reimbursement fees that had been called for since the prior decade and postponed every time since because of fears doctors would flee the Medicare program if the reductions were to happen (the postponement is known as the “doc fix”). Each time the “doc fix” was extended, the pain that would be caused if it was not extended yet again grew.
The 2007 Trustees’ Report, while it pushed off the year of reckoning to FY2013, triggered the “Medicare funding warning” as it was still within the 7-year scope of the trigger and the second consecutive finding. Accordingly, President Bush had Health and Human Services Secretary Mike Leavitt submit in February 2008, just after he submitted the FY2009 budget, what became H.R. 5480 and S. 2662. Those two bills were promptly buried in committee by the Democrats running both Houses of Congress.
The 2008 Trustees’ Report once again pushed off the year of reckoning to FY2014, which was once again at the very end of the 7-year scope of the trigger. President Obama chose not to submit any legislation despite his party controlling both Houses. Instead, we got PlaceboCare at the beginning of 2010, while the 2009 Trustees’ Report, breaking with the postponement history, once again put the year of reckoning as FY2014.
Fresh from his victory on PlaceboCare, Obama failed to address the immediate problem, and much like the “unanticipated” rapid decline of the Social Security “Trust Funds”, the state of the Medicare “Trust Funds” also declined very rapidly. The 2010 Trustees’ Report found that the year of reckoning had come that fiscal year, as general revenues were set to comprise more than 45% of the total Medicare expenditures in FY2010, with a projected temporary return to general funds needing to cover less than 45% of expenditures in FY2012. Instead of addressing this in early 2011, Obama and Congress once again extended the “doc fix” a bunch of times, which by that point represented a significant “overrun” versus budget.
Tired of waiting for any sign of leadership from the White House out of a very-predictable fiscal crisis, the House Budget Committee included a version of Medicare reform first outlined in Paul Ryan’s Roadmap for America. While it would not have stopped the warning in the 2011 Trustees’ Report as FY2011 was more than half over, it would have put the program on the path to no longer triggering said warnings and ultimately long-term solvency while permanently implementing the “doc fix”. Unfortunately, just as the 2008 legislation designed to address what was then a future funding problem in Medicare, that budget was buried by the Democrats in the Senate as part of their three-year-long refusal to pass any budget, and because the only action on Medicare was continued extensions of the “doc fix”, general revenues comprised more than 45% of expenditures in FY2011 and FY2012.
Speaking of that 2011 Trustees’ Report, it pushed back the return to temporary overall Medicare stability to FY2013. Once again, instead of addressing the problem, Obama and Congress extended the “doc fix”, making it all but certain that for the fourth consecutive year and probably a fifth with no corrective action, general revenues will comprise more than 45% of Medicare expenditures.
The House Budget Committee will once again attempt to reform Medicare along the lines of a premium-support program. This time, there is some support from the other side of the aisle, even if that support won’t be too public until after November and then only if there is a change in the White House, Senate, or both.
Revisions/extensions – There’s more from Tina Korbe on the front page.