NCPA - National Center for Policy Analysis


February 25, 2008

The Bush administration's Medicare reform proposals, like previous attempts at entitlement reform, have been proclaimed dead on arrival by Democrats in Congress, says Rep. Jeb Hensarling (R-Texas), chairman of the Republican Study Committee. 

The news comes amid details on the precarious financial situation of the trust funds that finance Medicare expenditures:

  • The Medicare trustees warn that Medicare faces collective unfunded obligations of more than $74 trillion -- more than six times the current size of the American economy.
  • The Government Accountability Office estimates that for each year that Medicare and Social Security entitlements go unreformed, their projected shortfall grows by an additional $2 trillion.
  • The Medicare Part A trust fund is scheduled to be "exhausted" -- in plain English, flat broke -- in 2019.
  • This means that tens of millions of Baby Boomers face an uncertain retirement rife with questions about the future of health care.

The president's budget constituted a good first step toward Medicare reform, proposing to slow the growth of Medicare by nearly $178 billion over the next five years.  In addition to the White House budget proposals, there are additional, more comprehensive solutions that have the potential to yield greater savings and slow the growth of the health costs that threaten to cripple our future.  For instance:

  • Restructuring Medicare cost-sharing and increase means-testing for wealthy beneficiaries would ensure the program's sustainability by making beneficiaries more cost-conscious.
  • Medical liability reform would reduce providers' costs associated with legal claims, saving money for Medicare and the general public.

Source: Jeb Hensarling, "Medicare and entitlements," Washington Times, February 22, 2008.


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