MEDICARE: the favorite target of Republicans

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Forums > All Posts > MEDICARE: the favorite target of Republicans

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05-11-2011, 04:50 PM

Schmidt
Colorado Springs, CO
Posts: 1058

We have discussed the Social Security Trust Fund in other threads, but since Medicare is one of the big targets of Republicans for budget deficit reduction, I thought it would be timely to share a few facts of where the program stands financially:

Reference: 2010 Report of the Board of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds , August 5, 2010 - 289 pages of text, tables and charts.

The Medicare program has two Trust Funds.

Hospital Insurance (HI) Trust Fund, for Medicare Part A. It helps pay for hospital, home health, skilled nursing facility, and hospice care for the aged and disabled.

Supplementary Medical Insurance (SMI) for Medicare Parts B and D. Medicare Part B helps pay for physician, outpatient hospital, home health, and other services for the aged and disabled who have voluntarily enrolled. Part D provides subsidized access to drug insurance coverage on a voluntary basis for all beneficiaries and premium and cost-sharing subsidies for low-income enrollees.

Medicare Part C or Medicare Advantage is a supplemental private insurance program paid for by enrollees and is not part of the two Medicare Trust Funds.

In 2009, 46.3 million people were covered by Medicare: 38.7 million aged 65 and older, and 7.6 million disabled.

About 24 percent of beneficiaries have also chosen to enroll in Part C private health plans.

Total benefits paid in 2009 were $502 billion. Income was $508 billion, expenditures were $509 billion, and assets held in special issue U.S. Treasury securities in the HI and SMI Trust Funds were $381 billion.

The financial status of the HI trust fund is substantially improved by the lower expenditures and additional tax revenues instituted by the Affordable Care Act. These changes are estimated to postpone the exhaustion of HI trust fund assets from 2017 under the prior law to 2029 under current law and to 2028 under the alternative scenario.

The SMI trust fund is adequately financed over the next 10 years and beyond because premium and general revenue income for Parts B and D are reset each year to match expected costs.

The projections are based on current law which mandates cost controls on fees assuming providers can cut costs through identified improvements in productivity and the elimination of wastage. However, the trustees have concerns that Congress will override those controls and allow costs to rise above the levels projected in their report. This is a contentious point now, but as it now stands under current law, the above projections do not show the alarmist view of medicare that our politicians seem to convey.

Like Social Security, however, whenever the government has to dip into the Trust Funds (cashing in the special issue bonds) then the money has to come out of the General Fund...ie current taxes. It would seem that Republicans never want to do that.

Like the Social Security Trust Fund, it is a government borrowing problem, and the funds borrowed from these Trust Funds have to be repaid at some point. The Republican would say never and have obfuscated the rhetoric around the Paul Ryan Budget that effectively privatizes Medicare.

Go to the report and browse it for yourself.

05-27-2011, 05:34 AM

John Mario
Not Selected
Posts: 20

Thanks for an informative detailed article.

03-14-2012, 05:31 PM

falcon0825
Little Rock, AR
Posts: 2

How is it a Republican issue when Obama keeps borrowing from Medicare to finance Obamacare. Try to the tune of 500 billion dollars. Look it up.

03-14-2012, 10:48 PM

Schmidt
Colorado Springs, CO
Posts: 1058

falcon0825--

Refer to this Washington Post article: Fact Checking the GOP debate: $500 billion in cuts to Medicare?

As the WP points out, "the $500 billion figure comes from the difference over 10 years between anticipated Medicare spending (what is known as “the baseline”) and the changes the law makes to reduce spending."

"The savings actually are wrung from health-care providers, not Medicare beneficiaries. These spending reductions presumably would be a good thing, since virtually everyone agrees that Medicare spending is out of control. In the House Republican budget, lawmakers repealed the Obama health care law but retained all but $10 billion of the nearly $500 billion in Medicare savings, suggesting the actual policies enacted to achieve these spending reductions were not that objectionable to GOP lawmakers."

The point that I would make is that even without "Obamacare" both the Democrats and the Republicans would have cut Medicare costs to the health care providers (not the patients) by some $500 billion ($490 billion for the Republicans). It's called efficiency improvements...cutting wasteful spending that doesn't add value.

Now it is true that President Obama used the savings in part to offset the higher costs of the Affordable Care Act. It goes along with the Republican philosophy that if you're going to add a cost, it has to be offset by a reduced cost somewhere else. Remember when the Eric Cantor and the Republicans threatened to withhold aid from the Joplin, Missouri tornado victims until the Democrats could find offsetting costs elsewhere?

It's just another way Republicans "spin" the facts to create a false impression.

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