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Letter to the Honorable Joe Barton 1 (March 2005)

handle is hein.congrec/cbo9285 and id is 1 raw text is: CONGRESSIONAL BUDGT OF FICE Douglas Holtz-Eakin,D U .S. Congress ashington, DC 20515 March 4, 2005 Honorable Joe Barton Chairman Committee on Energy and Commerce U.S. House of Representatives Washington, DC 20515 Dear Mr. Chairman: Today the Congressional Budget Office (CBO) released its analysis of the President's budget for fiscal year 2006, which includes an update of our baseline projections for the 2006-2015 period. In preparing those projections, we have revised our estimates of spending for Medicare, including the new Part D prescription drug program. I am writing to describe CBO's current estimate for that program. CBO's Original Estimate for the Medicare Modernization Act (MMA) In November 2003, CBO estimated that the MMA (Public Law 108-173) would result in additional direct spending totaling about $395 billion over the 2004-2013 period. That amount was the net of a number of different types of expenditures and receipts that would result from the legislation. It included an estimated $552 billion in mandatory spending for Medicare Part D-consisting of $771 billion in payments for benefits and mandatory administrative costs, offset by $219 billion in premiums paid by beneficiaries and payments by states. (Those payments by states represent part of their share of the savings from shifting some Medicaid spending for prescription drugs to Medicare.) Those costs were further offset by net savings of almost $13 billion from changes to Parts A and B of Medicare and estimated savings of almost $145 billion in Medicaid and other federal programs because the Part D benefit would reduce spending in those federal programs (largely by shifting some spending for prescription drugs from those programs to Medicare).

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