The Future of Medicare

Statement

Over the course of the past year, with our nation's debt approaching a crisis level, the debate has shifted in Washington. After years of talking about how much to spend, the conversation is now squarely focused on how much spending we really need.

As these talks have progressed, you have heard more and more about the future of Medicare and the need to protect its solvency for future generations. House Budget Committee Chairman Paul Ryan of Wisconsin has proposed a plan; the President has proposed a competing plan. Others have floated their own plans and trial balloons on Medicare.

None of these plans are ideal, yet the projections are as drastic as they are clear. Medicare already pays out more benefits than it collects in taxes, and the Medicare Hospital trust fund is predicted to be completely insolvent by 2020, now less than a decade away. Additionally, Medicare enrollment continues to grow by 2 percent each year, and will grow to 3 percent annually as the baby boom generation reaches age 65. This coupled with rising health care costs brings us ever closer each year to the day when the Medicare program can no longer sustain itself.

Because of this reality before us, ideas to make Medicare more sustainable deserve attention and close scrutiny. We must also be honest about the problem. When the health care law was passed last year, we were told that it included savings to extend the solvency of Medicare. This however was refuted in a report by the Obama Administration's own Chief Actuary for Medicare and Medicaid, Richard Foster, who outlined how the Medicare "savings" were instead used to pay for a new health care entitlement program. Foster's conclusion confirms what we already know: you cannot spend the same dollar twice -- once for Medicare benefits and again to pay for a new entitlement. Foster wrote that Medicare savings "cannot be simultaneously used to finance other Federal outlays … and to extend the [Medicare] trust fund."

Moreover, Foster additionally projected that the savings originally assumed in the health care law are "extremely unlikely to occur." He explains that specific areas of savings, such as reductions in fees for physicians, are "clearly unworkable" and as such the projected savings from the current law "should not be interpreted as our best expectation of actual Medicare financial operations in the future."

Certainly there will be many opportunities to cut down on extravagant spending, including things like earmarks and bloated "stimulus" spending, but Medicare will remain part of the conversation since it makes up about 15 percent of our nation's budget and is one of the largest portions of the entire federal government. I am hopeful my colleagues and I will work together to make Medicare a better and, as importantly, a sustainable program for our children and grandchildren.

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