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CONDITION: CRITICAL
JUNE 5, 1996
TRANSCRIPT
Elizabeth Farnsworth puts today's announcment in historical and political perspective.
Clinton economic advisor Laura Tyson and Rep. Bill Thomas debate Republican and Democratic proposals.
Paul Solman discusses Medicare's future with two health care economists
ELIZABETH FARNSWORTH: Today's announcement that one portion of the Medicare program will be bankrupt in five years throws a spark on election year tinder. The elderly make up a huge voting block and their medical program is once again a very hot issue.
Signed into law in 1965 to provide health care coverage to the nation's senior citizens, Medicare today provides benefits to about 33 million elderly and 4 million disabled Americans. With rising medical costs and an increasing number of seniors, Medicare spending has been going up at an annual rate of about 10 percent. Costs reached $182 billion this year. To understand today's trustee's report, it's important to know there are two different kinds of Medicare benefits.
The first, known as Part A, pays for hospitalization, nursing, and home care. Funding for Medicare Part A comes from a trust fund built up through employee payroll taxes. Medicare Part B covers doctors' bills and other outpatient care. One quarter of the money that funds Medicare Part B comes from a monthly premium paid by everyone enrolled in the program, currently $42.50 a month. The rest of the funding comes from the government's general revenues. Today the trustees who oversee Medicare's finances, including three members of President Clinton's cabinet, said the hospital insurance trust fund faces bankruptcy by 2001 unless action is taken.
ROBERT RUBIN, Secretary of the Treasury: Today as trustees we're reporting again what the trustees have reported for the past four years, which is that the Medicare Trust Fund must be strengthened. We said that in 1993, we said that in 1994, we said that in 1995, and we say that again this year.
ELIZABETH FARNSWORTH: The concern over Medicare isn't new, as Secretary Rubin said. The trustees had warned before that Part A was nearing bankruptcy. Controlling Medicare's costs was a major part of last year's budget battle which ended in a stalemate. But now, in an election year, the new report puts the debate right back in the spotlight. The most divisive issue is over preserving the viability of the Part A Trust Fund.
Republicans propose to reduce the projected growth of Part A spending by $123 billion to avoid the coming bankruptcy. They have not specified how they'll achieve those savings but they emphasize incorporating more private sector choices, including managed care, and changing some reimbursement rates.
The Clinton administration proposes cutting projected spending by about $72 billion. It also proposes shifting one major section of Part A costs $51 billion for home health care out of the Part A Trust Fund and into the government general revenue fund. Both sides were quick to address today's report.
SEN. BILL FRIST, (R) Tennessee: Today we'll hear once again that Medicare, the largest insurance program in this country, the largest health insurance program, which takes care of about 37 million senior citizens and individuals with disabilities, is going to go bankrupt, and it's going to go bankrupt even faster than we had anticipated one year ago.
PRESIDENT CLINTON: We have the ability right now to put 10 years into the--into the life of the Medicare Trust Fund, and we ought to just do it. We ought to just go on and do that. We can do that with no problem, and we can do it in the context of the balanced budget plan.
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