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Impact of Legislation (1981-1990) on Federal Spending for Medicare 1 (February 1991)

handle is hein.congrec/cbo9136 and id is 1 raw text is: C CONGRESSIONAL BUDGET OFFICE U.S. Congress Washington, DC 20515 Robert D. Reischauer Director NEMORANDUM February 4, 1991 TO: Health Staff FROM: Sandra Christensen SUBJECT: Impact of Legislation (1981-1990) on Federal Spending for Medicare This memorandum provides estimates of the impact that legislation enacted since 1980 has had on (gross) federal spending for Medicare. Two approaches are used to examine this question, but each is imperfect. Despite this, the two approaches yield similar implications--that current federal spending for Medicare is about 82 percent of what it would have been in the absence of legislation. The first approach shows the effect the Congressional Budget Office expected the legislation to have at the time of enactment, assuming no further legislative changes and no major changes in underlying trends in the health sector. The estimates for each year's legislation were based on a unique set of economic and spending projections believed applicable at the time the estimates were made. There is no assurance that these estimates accurately reflect savings actually achieved. The second approach shows how actual spending diverged from what spending would have been had previous trends continued. It is unlikely, however, that previous trends would have continued whether or not Medicare legislation was passed. One reason is that important technological advances have occurred in the health care sector, changes that have made it possible to provide beneficial services to more enrollees and to provide more of those services outside the hospital. Except for 1988, the provisions examined were contained in the annual budget reconcilation acts passed from 1981 through 1990. In 1988, there was no budget reconciliation act, but the Medicare Catastrophic Coverage Act (MCCA) was passed. Almost all of the new Medicare benefits provided under this act were subsequently repealed, however. Only new benefits under

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