About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline
LOG IN
LOG IN

42 IRET Congressional Advisory 1 (1995)

handle is hein.taxfoundation/iretcgadv0040 and id is 1 raw text is: May 16, 1995 No. 42 MEDICARE: CRISIS AND OPPORTUNITY Medicare faces two crises. First, Medicare Part A, Hospital Insurance (HI) will run short of spending authority in 2002, when its trust fund dries up. Second, even if HI were patched up, Medicare does not serve the public well. If It is impossib continued in its present form, federa budg Medicare will become dealing with ruinously expensive for reform of Med workers and retirees. It will everone's continue to drive up health proiding be care costs. It will force higher protection ai payroll taxes, impeding people's ability to save for their retirement needs, including long term health care for chronic illness or age related frailties not covered by Medicare. Medicare cannot continue without Congressional action. HI is already running deficits, and is only being kept current in its payments to hospitals by general revenues from the Treasury redeeming the trust fund. When the fund vanishes, payroll tax receipts increasingly will lag behind accumulating bills. HI will have to delay payments to providers for longer and longer periods, incurring ruinous, escalating interest penalties, and cash-strapped providers will begin refusing service to the elderly. Something must be done just to keep the program afloat. le to et d4 Me ricare enefi terca !ower It is impossible to deal with the federal budget deficit without dealing with HI and Medicare Part B (Supplemental Medical Insurance (SMI), covering physicians' charges and outpatient treatment). The projected deficits (outlays less tax and premium income) in HI and SMI account for $158 billion, or 70%, of the total federal budget deficit of $227 billion in FY2002. Outlays for HI will exceed payroll tax revenues and other non-interest income by $6 billion in FY1995, rising to $44 billion by FY2002, a $35 billion jump. Only about 30% of SMI outlays are currently covered by premiums paid by the program's enrollees. The remaining 70% of SMI outlays are paid for by taxpayers as a direct subsidy from the Treasury. Premiums will fall to 25% of outlays under deal with the current law next year, and to ficit without 19% by 2002, with taxpayers licare. Can making up the difference. The be turned to taxpayer subsidy is set to t, eventually explode, from $47 billion in ire and better FY1995 to $114 billion in cost? Yes. FY2002, a $67 billion jump. Furthermore, these FY2002 Medicare deficits are only the beginning. The combined Medicare deficits are projected to reach $400 billion a year by 2010, and $1 trillion a year by 2020 as the baby boom generation begins to retire. The House and Senate Budget Committees' 1996 Budget Resolutions each call for significant deceleration of Medicare's outlay growth. These proposals have been severely criticized as balancing the budget by slashing medical care for the elderly. Medicare is not being sacrificed to eliminate a budget deficit originating in other areas. These programs ARE the budget deficit. The Bipartisan Commission on Deficit and Entitlement Reform made this point loud and clear. The only Institute for Research on the Economics of Taxation IRET is a non-profit, tax exempt 501(c)(3) economic policy research and educational organization devoted to informing the public about policies that will promote economic growth and efficient operation of the free market economy. 1730 K Street, N., Suite 910, Washington, D.C. 20006 Voice 202-463-1400 * Fax 202-463-6199 0 Internet www.iret.org

What Is HeinOnline?

HeinOnline is a subscription-based resource containing thousands of academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.



Contact us for annual subscription options:

Contact Us

Already a HeinOnline Subscriber?

Log In

profiles profiles most