10.05.21

Democrats’ Reckless Taxing-And-Spending Spree Would Jeopardize Medicare

A Month After The Latest Medicare Trustees’ Report Showed The Medicare Trust Fund Becoming Insolvent In 5 Years And Program Costs Growing Out Of Control, Democrats Are Proposing Adding ‘Hundreds Of Billions Of Dollars In New Expenses And Obligations’ To Medicare, Something One Democratic Senator Called ‘Fiscal Insanity’

SENATE REPUBLICAN LEADER MITCH McCONNELL (R-KY): “Just look at what Democrats want to do to American families’ health care and prescription medicines. Last month, a new report from the Medicare trustees confirmed that the trust fund for Medicare Part A is on track to reach insolvency in just five years. More than 54 million American seniors rely on Medicare and the promises we have already made are getting more and more expensive to keep. Last year, for the first time ever, the amount the federal government spends on Medicare alone exceeded everything that we spent on the national defense. With Medicare five years from real fiscal problems, the last thing we need right now are politicians stretching the program even thinner. But that is exactly what Democrats are doing behind closed doors at this very moment. Their reckless taxing and spending spree would heap hundreds of billions of dollars in new expenses and obligations onto the already troubled Medicare trust funds. Hundreds of billions of dollars in new obligations… for untested new programs… for big new pools of people… all using the care seniors count on as the Democrats’ piggy bank. With the program already on unsure footing.” (Sen. McConnell, Remarks, 10/05/2021)

 

Sen. Joe Manchin (D-WV), Concerned About ‘Stabilizing What We Have,’ Called Democrat Leaders’ Medicare Spending Plans ‘The Definition Of Fiscal Insanity’


SEN. JOE MANCHIN (D-WV): “I’ll say this about Medicare: We need to stabilize it. By 2026, you understand the trust fund is going to be insolvent. ... I want to make sure we are stabilizing what we have before we start going down this expansion role.” (“Manchin Fires Warning Shot On Plan To Expand Medicare,” The Hill, 9/23/2021)

  • SEN. MANCHIN: “At some point, all of us, regardless of party must ask the simple question – how much is enough? What I have made clear to the President and Democratic leaders is that spending trillions more on new and expanded government programs, when we can’t even pay for the essential social programs, like Social Security and Medicare, is the definition of fiscal insanity.” (Sen. Manchin, Press Release, 9/29/2021)

 

The Latest Report Of The Medicare Trustees Shows That Medicare Part A’s Trust Fund Will Be Empty In 5 Years And Are Issuing A ‘Medicare Funding Warning’ For ‘The Fourth Consecutive Year’

“The estimated depletion date for the HI [Medicare Part A] trust fund is 2026, the same as in last year’s report. As in past years, the Trustees have determined that the fund is not adequately financed over the next 10 years.” (“2021 Annual Report Of The Boards Of Trustees Of The Federal Hospital Insurance And Federal Supplementary Medical Insurance Trust Funds,” Boards Of Trustees Of The Federal Hospital Insurance And Federal Supplementary Medical Insurance Trust Funds, 8/31/2021)

Meanwhile, Cost Growth For Medicare Part B And Part D Has Vastly Outpaced GDP Growth And Is Forecast To Outstrip It Further

“Part B and Part D costs have averaged annual growth rates of 8.5 percent and 3.2 percent, respectively, over the last 5 years, as compared to growth of 2.8 percent for GDP. The Trustees project that cost growth over the next 5 years will average 7.2 percent for Part B and 6.1 percent for Part D, faster than the projected average annual GDP growth rate of 5.3 percent over the period.” (“2021 Annual Report Of The Boards Of Trustees Of The Federal Hospital Insurance And Federal Supplementary Medical Insurance Trust Funds,” Boards Of Trustees Of The Federal Hospital Insurance And Federal Supplementary Medical Insurance Trust Funds, 8/31/2021)

All This Has Caused The Medicare Trustees To Issue Repeated Warnings On Medicare Funding Triggered By ‘The Difference Between Medicare’s Total Outlays And Its Dedicated Financing Sources’

“The Trustees are issuing a determination of projected excess general revenue Medicare funding in this report because the difference between Medicare’s total outlays and its dedicated financing sources is projected to exceed 45 percent of outlays within 7 years. Since this determination was made last year as well, this year’s determination triggers a Medicare funding warning … This is the fifth consecutive year that a determination of excess general revenue Medicare funding has been issued, and the fourth consecutive year that a Medicare funding warning has been issued.” (“2021 Annual Report Of The Boards Of Trustees Of The Federal Hospital Insurance And Federal Supplementary Medical Insurance Trust Funds,” Boards Of Trustees Of The Federal Hospital Insurance And Federal Supplementary Medical Insurance Trust Funds, 8/31/2021)

 

An Analysis Of The Trustees’ Report By The Committee For A Responsible Federal Budget Finds Spending On All Parts Of Medicare ‘Will Grow Rapidly In The Coming Decades,’ Which ‘Underscores The Need For Policies To Reduce Medicare Costs’

“The Medicare Trustees’ report shows that the Part A Hospital Insurance trust fund will be insolvent in just five years, the trust fund faces a shortfall of 0.77 to 1.61 percent of payroll, and Medicare spending will grow significantly over the next few decades.” (“Analysis of the 2021 Medicare Trustees' Report,” Committee for a Responsible Federal Budget, 8/31/2021)

  • “Medicare Part A, which pays for inpatient hospital services, is financed mostly from a payroll tax through the HI trust fund. Though the trust fund had a balance of $134 billion at the end of 2020, the Trustees expect it to run cash deficits in 2021 and every year after until it is exhausted in 2026, just five years from now. Upon insolvency, provider and insurer payments would have to be cut by 9 percent (up to 22 percent by 2045) to bring spending in line with revenue. The HI trust fund has not been this close to projected insolvency since 1997, when depletion was projected to be just four years away. Later that year, lawmakers enacted a significant deficit reduction package that included Medicare cost reductions.” (“Analysis of the 2021 Medicare Trustees' Report,” Committee for a Responsible Federal Budget, 8/31/2021)

“According to the Medicare Trustees, all parts of Medicare – including Parts A, B, and D – will grow rapidly in the coming decades. The Trustees project that gross Medicare spending will grow from 4.1 percent of GDP in 2021 to 5.3 percent in 2031 and then to 6.2 percent in 2045.” (“Analysis of the 2021 Medicare Trustees' Report,” Committee for a Responsible Federal Budget, 8/31/2021)

“This rapidly rising spending underscores the need for policies to reduce Medicare costs.” (“Analysis of the 2021 Medicare Trustees' Report,” Committee for a Responsible Federal Budget, 8/31/2021)

 

Indeed, ‘The Federal Government For The First Time Spent More On Medicare Than On National Defense’ Last Year

CHRIS POPE, Manhattan Institute Senior Fellow: “In 2020, the federal government for the first time spent more on Medicare than on national defense. Absent legislative reform, Medicare funding as a share of GDP is projected to increase by another 50 percent over the next 20 years. Medicare’s trustees recently surprised nobody by projecting that the program’s trust fund will run out of money within five years.” (Chris Pope, “Medicare’s Trust Fund Is Not Worth Much,” National Review, 9/30/2021)

 

Despite Medicare’s Unquestioned Increasingly Troubled Financial Outlook, Democrats Are Trying To Add Even More Obligations And Entitlements The Program Can’t Afford

“Democrats formally began their push [in August] for the most significant expansion of the nation’s social safety net since the Great Society of the 1960s, unveiling a budget blueprint that would spend $3.5 trillion on health care, child and elder care, education and climate change. … But it is what they intend to create from scratch that would be transformative. The provisions include expanding Medicare to include dental, hearing and vision benefits, and possibly lowering the eligibility age.” (“Senate Democrats Begin $3.5 Trillion Push for ‘Big, Bold’ Social Change,” The New York Times, 8/09/2021)

SEN. BERNIE SANDERS (I-VT), Senate Budget Committee Chairman: “One of the things we are going to do … is to expand Medicare to cover dental, vision, and hearing aids. … The need to expand Medicare to cover dental, hearing aids, and eyeglasses is absolutely critical. ... Medicare is supposed to cover the healthcare needs of seniors. Well, oral health, hearing, and vision are parts of healthcare…. [I]t is just hard for me to imagine that any Member of the House or Senate would oppose this very popular and important provision.” (Sen. Sanders, Congressional Record, S6641-S6642, 9/23/2021)

 

The Congressional Budget Office (CBO) Recently Estimated That Just Adding Dental, Vision, And Hearing Benefits To Medicare Would Cost At Least $358 Billion In The First 10 Years

“Title VI [of H.R.3 for the 116th Congress] would add new benefits for dental, vision, and hearing care (including dentures, glasses, hearing aids, and preventive services) to the Medicare program. CBO estimates that those provisions would increase direct spending by about $358 billion over the 2020-2029 period.” (Phillip L. Swagel, Congressional Budget Office Director, Letter to Rep. Pallone, 12/10/2019)

 

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Related Issues: Senate Democrats, Health Care