For the second straight year, the trustees of the Medicare hospital trust fund have predicted it will go broke in 2001.
"The good news is that the health of the Medicare trust fund has not gotten worse," said HHS Secretary Donna Shalala. "The bad news is that the year 2001 is one year closer."
Lawmakers of both parties said the report underscores the need to reach a budget agreement that reduces short-term Medicare spending and a long-term solution that will restructure the program. Providers echoed the need to overhaul Medicare.
The Federal Hospital Insurance Trust Fund pays Medicare Part A reimbursements to providers.
According to the trustees, the Medicare Part A trust fund took in $124.6 billion in calender 1996 but spent nearly $130 billion for a net deficit of more than $5 billion. Hospitals received two-thirds, or $86 billion, of the expenditures. Home health agencies were reimbursed $17.5 billion (13%). The remainder went to a variety of post-acute care providers and managed-care plans.
The trust fund first ran an annual deficit in 1995 when the fund spent $36 million more than it received in revenues. The trustees predict a deficit of nearly $13 billion in 1997 and growing annual shortfalls.
Congressional Republicans argued the report underscores the need for President Clinton to agree to a balanced-budget plan soon.
"If that doesn't heighten the need to bring this to a responsible conclusion, I don't know what will," said Rep. William Thomas (R-Calif.), chairman of the House Ways and Means health subcommittee.
The Republican leaders also said the report shows the need for structural changes to the program.
"Merely reducing what providers are paid doesn't bring about needed reforms," said Sen. William Roth (R-Del.), chairman of the Senate Finance Committee.
But Sen. Edward Kennedy (D-Mass.) warned the White House against seeking even greater reductions in projected Medicare spending as a short-term solution, particularly if those additional savings really will be used to fund tax cuts.
"Senior citizens need Medicare more than corporations and wealthy individuals need tax cuts," he said.
Provider and managed-care groups said the report showed that Medicare needs to be revamped.
In a statement, the American Association of Health Plans said: "Comprehensive Medicare reform that expands choice of health plans for seniors . . . should be enacted soon."
Richard Pollack, American Hospital Association executive vice presi-dent of federal relations, called the report "a wake-up call to the fact that (Medicare) needs structural reforms rather than just ratcheting down on providers. Unfortunately, it appears that Congress is about to hit the snooze button again."