July 13, 1999

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July 13, 1999

PRESIDENT CLINTON:
URGING CONGRESS TO ADDRESS THE CHALLENGES FACING MEDICARE

I ask the Republican leaders in Congress to reconsider the size of their tax cuts, and instead join me in putting first things first. Lets look at the federal budget the way any responsible family would look at its budget. Lets figure out how much we must spend to meet our current obligations to strengthen national defense and educate our children and to meet our future obligations to provide quality health care for future retirees. Lets set that money aside first. Then lets talk about how much of the surplus we want to spend on tax cuts.: President Bill Clinton; July 13, 1999

Today, in Miami, Florida, President Clinton urged Congressional Republicans to reconsider their proposal to use the entire surplus for a tax cut without dedicating one dollar to extending the life of the Medicare Trust Fund. The President emphasized the nations unique opportunity to secure Medicare for a quarter of a century and to provide for a long-overdue prescription drug benefit. The President outlined the consequences of the Republican plan with regard to Medicare, the national debt, and the funding of priorities like military readiness and education.

Facing Medicares Challenges. Medicare is faced with unprecedented financing challenges in the next century. For example:

Medicares enrollment will double from 40 to 80 million by 2035.
Medicares current financing structure cannot accommodate a doubling of Medicares enrollment.

Medicare will run out of funding in 2015 - 19 years before Social Securitys projected insolvency - or sooner, if unexpected shortfalls occur.

Committed to Strengthening Medicare. President Clinton is deeply committed to addressing Medicares financing challenges now not passing the problems on to our children and grandchildren. The Presidents plan would:

dedicate $374 billion over 10 years to strengthen Medicare;
use $328 billion of that amount to lengthen the solvency of Medicare until 2027;
offer a prescription drug benefit, using only a fraction of the budget surplus; and
help reduce public debt by locking away the Medicare surplus dedication in its trust fund.

Without the help of additional financing, Medicares growth rate per beneficiary would have to be kept below general inflation resulting in a real cut in Medicare. This means that the value of Medicare spending per beneficiary would erode. Virtually every independent health analyst agrees that Medicare cannot be significantly strengthened without adding outside financial support such as the surplus.

Republican Leadership Has Failed to Address Medicares Challenges. There has not been a single Republican Leadership proposal this year that dedicates any funding from the surplus for Medicare, proposes specific, responsible reforms to make Medicare more competitive or efficient, or adds a meaningful prescription drug benefit to Medicare. The Breaux-Thomas proposal, which would have only a small effect on the Medicare Trust Fund ($66 billion in savings over 10 years), includes problematic proposals like:

raising premiums for traditional Medicare;
raising age eligibility to 67;
larger provider payment reductions; and
home care and nursing home co-pays.

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