March 25, 2008 -- Medicare's trust fund will spend more than it receives from taxes this year, a report warned Wednesday.
The event marks the beginning of what Bush administration officials predict is the start of a slide toward possible bankruptcy for Medicare's Part A Trust Fund, which pays hospital expenses for about 42 million beneficiaries.
A report from the Social Security and Medicare Trustees predicts that in 2019 the trust fund would no longer be able to pay all of its bills. That's unchanged from last year's prediction. Still, the trustees, made up entirely of Bush administration officials, proclaimed the program to be in dire financial shape.
"Americans' sensitivity to entitlement warnings have been numbed some," said Michael O. Leavitt, the Secretary of Health and Human Services and a trustee to the program.
"Our children and our children's children cannot afford another year on autopilot," he told reporters.
Medicare, like the rest of the U.S. health system, is plagued by a pair of steadily worsening trends. The population is aging, threatening to double Medicare's roles over the next 50 years. At the same time, health care costs rise steadily each year.
Bush officials are trying to push Congress to cut some benefits and to introduce a means test for the Part D prescription drug plan. That would force wealthier beneficiaries to pay higher premiums, a policy that Democrats oppose.
Congress is set to take up a Medicare bill this spring designed to stave off a scheduled cut in doctors' payments.
"There's fertile ground for at least a conversation," one Bush administration official said.
Medicare Funding Debate
But Democrats, who control Congress, have shown little appetite for the reforms favored by the president. Rep. Pete Stark, D-Calif., chairman of the House subcommittee controlling Medicare, labeled claims of the programs bankruptcy alarmist.
"Congress has regularly modified and modernized Medicare to accommodate advances in medicine and meet the demands of a growing population," Stark said in a statement.
The report is usually generated by a group of administration officials and independent experts. But for the first time no independent experts participated in this year's report.
"Congress and the president could not agree on a set of trustees, so there were no independent trustees," said Marilyn Moon, a vice president of the American Institutes for Research who is a Social Security and Medicare trustee.
Congress is not expected to take large steps to reform Medicare before presidential elections in November. Democratic presidential candidates Hillary Clinton and Barack Obama have pledged to pursue sweeping health reforms if elected. Those reforms would likely in large part include Medicare.
"The hospital insurance trust fund is not the key issue facing Medicare. The key issue is whether our nation believes that affordable health care should be a fundamental right for the American people," said Robert Hayes, president of the Medicare Rights Center, a Medicare advocacy group.
Current law cuts doctors' Medicare payments by 4.8% starting July 1 and then cuts them by another 6% in 2009. Congress would have to act by June 30 of this year to prevent the cut.