The good news for the Medicare Hospital Insurance Trust Fund last week was bad news for lawmakers seeking fundamental reform of the program.
The trustees of the Medicare program announced that the fund, which pays for hospital, nursing home and other institutional care, will not be depleted until 2015. That is seven years later than the trustees projected just last year and 14 years later than they were projecting just two years ago.
The fund's healthy diagnosis may contain some good news for providers because it may ease pressure for additional cuts in provider payments that President Clinton and the National Bipartisan Commission on the Future of Medicare have proposed.
The trustees said the program has been reinvigorated by payment restraints enacted under the federal Balanced Budget Act of 1997. Also helping have been a crackdown on fraud and abuse, record-breaking economic growth and new management initiatives at HCFA.
But the rosy outlook means that would-be Medicare reformers will have a tougher time making their case. With 16 years before the trust fund goes broke, neither the public nor policymakers are likely to put pressure on lawmakers to take action to restrain spending growth. That leaves in question a proposal put forward last month by Sen. John Breaux (D-La.), who chaired the Medicare reform commission.
"It's put off for at least a decade any serious discussion of Medicare reform," said James Scott, president of the Premier Institute in Washington. "We're not close enough to the edge of the cliff to worry about the length of the fall."
Breaux continued to tout his plan to transform the program from a bill-payer to a system that pays most, but not all, of beneficiaries' premiums for private health-insurance coverage.
That plan got 10 votes on the 17-member commission, but not the 11-vote supermajority necessary to make a formal recommendation to Congress under the law that created the panel.
"We can preserve Medicare well past 2015 by enacting reforms supported by a bipartisan majority of commissioners, which would extend the program's solvency by addressing the program's underlying problems," Breaux said in a written statement.
Clinton administration officials, who sit on the Medicare Part A Trust Fund board of trustees, put a good face on the fund's extended life, however. They said it will give Congress and the White House more time to come to an agreement on long-term reforms to ensure that enough money will be available to finance the healthcare of the aging baby boom generation.
They also said the president was working on a Medicare reform proposal -- which he wants enacted by the end of the year -- in response to Breaux's charges that the White House had effectively blocked the commission's work.
Clinton is likely to include in his plan a proposal announced earlier this year to use $700 billion of the federal budget surplus over the next 15 years to beef up the trust fund. "Setting aside 15% of the surplus would extend the life of the trust fund another 12 years, to 2027," said HHS Secretary Donna Shalala, one of the trustees, in announcing the trustees' report.