RAO Davao City

United States Military Retiree Activities Office Davao City, Philippines

MEDICARE TRUST FUND 5 June 2008

Posted by Service Officer on June 5th, 2008

When a government trust fund no longer has enough cash revenues to pay benefits in full, the Treasury must provide cash from general revenues to pay the interest and redeem the bonds held by the trust fund. But, first, lawmakers must agree on where the money will come from to do that. They can increase taxes, increase borrowing, curt benefits, or cut spending such as COLAs. Historically, seniors have paid their share in higher out-of-pocket costs. The Medicare Hospital Insurance (Part A) Trust Fund last ran low on cash in the late 1990’s. By 1997 Congress passed the most massive cuts to Medicare in the history of the program — $116 billion ($153 billion in today’s dollars) over five years. In addition to cutting payments to hospitals, a provision of the 1997 law moved certain costs that were originally paid under Part A to Part B. While most seniors do not pay a premium for Part A, they do pay a hefty one for Part B. Thus the transfer of costs was one of several factors contributing to the astronomical growth in Medicare Part B premiums, which grew from $43.80 in 1998, to $96.40 in 2008 (120%).

 

Now the Medicare Part A Trust Fund is in trouble all over again. Earlier this year, the Congressional Budget Office projected that the Medicare Part A Hospital Insurance Trust Fund ended 2007 with a $17 billion surplus, and would end 2008 with a $16 billion surplus. But if the government only counts the real cash revenues (excluding government bonds on interest earned), according to the 2008 Medicare and Social Security Trustees reports the Part A Trust Fund ended 2007 about $500 million in the red, and is projected to end 2008 with a $10 billion deficit. President Bush has proposed $178 billion in cuts over the next five years, which, if passed, would exceed the cuts in the 1997 Balanced Budget Act. The Senior Citizen’s League (TSCL) is highly concerned and recently submitted a statement to a hearing on The President’s Fiscal Year 2009 Budget to the House Ways and Means Committee supporting the passage of “The Social Security and Medicare Lock-Box Act,” in addition to recommending that the government do a better job of reducing waste, fraud, and abuse. Because the new President and Congress will surely be tasked with fixing Medicare’s financing, TSCL also urges seniors to carefully examine the records of candidates, and make sure your voter registration is up-to-date to be ready for the upcoming elections. [Source: Social Security and Medicare Advisor, Vol. 13, No. 5 dtd 27 May 08 ++]

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