Medicare Money Problems Trigger Warning Medicare is still going broke, according to an annual report to trustees. That's not new, but a mechanism created by Congress in 2003 compels the federal government to take steps to address the problem. A political firestorm is likely.
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Medicare Money Problems Trigger Warning

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Medicare Money Problems Trigger Warning

Medicare Money Problems Trigger Warning

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RENEE MONTAGNE, host:

The Medicare health program yesterday got its annual financial physical. As usual, it's okay for the moment but its long-term prognosis is bleak. And this year in particular, that news is likely to touch off a political firestorm.

NPR's Julie Rovner reports.

JULIE ROVNER: First, the good news from Medicare's trustees. The trust fund that pays for hospital and nursing home care has enough money to last until the year 2019, that's a year longer than last year's projection. But also at the news conference to announce the annual trustee's report, there was this - from Health and Human Services, Secretary Michael Leavitt.

Mr. MICHAEL LEAVITT (Secretary, Department of Health and Human Services): This year's spending has triggered for the very first time a Medicare funding warning.

ROVNER: That warning is a mechanism that was created in 2003 by congressional Republicans. They wanted a way to keep closer tabs on the portion of Medicare that's funded not by payroll taxes, but by general taxes and Medicare premiums. Known as Part B, it covers doctor visits and other outpatient care. The warning is triggered when, for two years in a row, Part B is expected to exceed 45 percent of total Medicare spending within seven years. This year is the second year. As Leavitt noted at the press conference, the first action triggered by the warning comes from the White House.

Mr. LEAVITT: The warning requires that the president propose solutions to curb spending when he submits his 2009 budget.

ROVNER: That happens next February. Then Congress is supposed to act on those recommendations by no later than next June. But the idea of major cuts to Medicare and what will by then be the middle of a presidential campaign, seems highly unlikely to people like Bruce Vladeck. He ran the Medicare and Medicaid programs during the Clinton administration.

Mr. BRUCE VLADECK (President, University of Medicine & Dentistry of New Jersey): Well, I'm trying to remember if there's ever been significant Medicare legislation passed in a presidential election year.

ROVNER: And Vladeck, who now runs the University of Medicine & Dentistry of New Jersey, says the budget problem isn't really Medicare anyway. It's health care cost in general. So it's unrealistic to think that Medicare cost can be slowed on their own.

Mr. VLADECK: It's not really possible to get Medicare cost to grow financially lower rate than those of health care cost in general and still provide the kind of access to health care that Medicare beneficiaries have been promised.

ROVNER: There's another reason Congress isn't likely to act on the funding warning. Robert Greenstein, who heads the Liberal Center on Budget and Policy Priorities, says Congress can't even bring itself to act on more minor funding recommendations made by its own Medicare expert advisors.

Mr. ROBERT GREENSTEIN (Executive Director, Liberal Center on Budget and Policy Priorities): Any member of Congress who makes a statement this week about Medicare in response to the trustee's report ought to be tracked all year long on how do they vote when the rubber meets the road, and their specific proposals to adopt their own commission's recommendations to save money and help Medicare's finances. Unfortunately, I think you'll see a number of them from both parties turning around and voting against those recommendations when the actual votes come.

ROVNER: One of the suggestions those advisers made for this year is that Congress cut funding for private HMOs that offer coverage through Medicare, something those HMOs are lobbying heavily against. Greenstein says that change alone could extend Medicare's solvency by an additional two years. With 78 million baby boomers creeping ever closer to Medicare eligibility, everyone agrees that something will have to be done to shore up the program's finances. What no one agrees on is what.

Julie Rovner, NPR News, Washington.

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