Q: What's the most up-to-date data on Medicare's fiscal health?
A: Thousands of Iowans have contacted me regarding protecting the future of the Medicare program. Medicare is a pact between the federal government, seniors and future seniors. This pact should be kept, and steps need to be taken to make sure it happens. Since Medicare was created in 1965, enrollment has increased from 19 million to about 50 million beneficiaries. The Congressional Budget Office estimates that by 2022, the number of Medicare enrollees will increase by about a third, to almost 67 million. This nonpartisan office also estimates that in fiscal 2012, gross Medicare outlays will total $575.7 billion. About 99 percent of that total is mandatory spending to cover benefit payments, such as payments to health care providers for services. The Congressional Budget Office projects that spending on Medicare benefits will increase to at least $1 trillion in fiscal 2022, an annual growth rate of seven percent. Medicare spending growth will put increasing strain on competing priorities in Congress. Today, the Medicare trust fund for hospital coverage is estimated to become insolvent in 2024, five years earlier than the estimate in 2010. Absent presidential and congressional action, Medicare is unsustainable in the long run. Every year that goes by without improving the solvency of Medicare only makes inevitable action that much more painful and difficult and jeopardizes the program for future seniors.
Q: What will it take to save Medicare?
A: Washington can't keep on kicking the can down the road hoping that Medicare's fiscal problems will fix themselves. If Medicare isn't made sustainable, it won't be there for seniors in the future. A bipartisan commitment is needed to modernize Medicare. There's no doubt Medicare needs to keep current with the practice of medicine so that seniors can receive high quality of care at a price America can afford. I will continue to fight to preserve and strengthen Medicare. It's one reason I voted against the 2010 health care overhaul. When passed, the health care law cut $529 billion dollars in Medicare payments to spend on a new government program. Today that figure has grown to more than $700 billion. The law also created an advisory board of unelected officials to cut provider payments. The Chief Actuary for the Centers for Medicare and Medicaid Services said these provisions will likely close down hospitals. Accessing health care in a rural state like Iowa is already difficult.
Q: What is health care's relationship to the federal debt?
A: Our nation's debt now exceeds $16 trillion. Over the next ten years, the federal government will spend $6.56 trillion on Medicare. Over the next ten years, the federal government will spend $4.59 trillion on Medicaid and the states will spend more than $3 trillion on Medicaid. Medicare and Medicaid spending will make up roughly one quarter of all federal spending over the next decade. No effective effort to address the national debt can avoid entitlement programs. Ignoring the solvency crisis of Medicare hurts both America's fiscal health and Americans who want Medicare to be there for them down the road. Efforts to address Medicare and Medicaid should prioritize improving the programs so they can continue to serve current and future beneficiaries.
Q: How exactly is Medicare funded?
A: Medicare expenditures are driven by a variety of factors, including the level of enrollment, the complexity of medical services provided, health care inflation, and life expectancy. Medicare has two separate trust funds--the Hospital Insurance (HI) trust fund and Supplementary Medical Insurance (SMI) trust fund. Medicare Part A (which covers hospital services, home health, hospice and skilled nursing) is financed mainly through payroll taxes paid by current workers and is accounted for through the HI trust fund. Medicare Part B (which covers physicians, labs, outpatient services and durable medical equipment) and Medicare Part D (the prescription drug program) are primarily funded through general revenue and beneficiary premiums and are accounted for through the SMI trust fund. Both funds are maintained by the Department of the Treasury and are overseen by a board of trustees that reports annually to Congress concerning the funds' financial status.