Levin, Stark -- Health Reform Law Adds Years to Medicare's Solvency

Press Release

Ways and Means Ranking Member Sander Levin (D-MI) and Health Subcommittee Ranking Member Pete Stark (D-CA) today responded to the release of the 2012 Medicare Trustees Report, which makes clear that the Affordable Care Act (ACA) substantially extends Medicare's solvency.

Without the ACA, Medicare's insolvency date would be just around the corner, in 2016 -- four years from now. The 2012 Medicare Trustees' Report projects a stable solvency date of 2024, the same as last year's report. For a summary of the solvency projections in past Trustees Reports, click here.

Ranking Member Levin: "Today's report makes clear just how vital health reform is to preserving and improving the Medicare program. The Report highlights stability in the solvency date and the potential of reform through Obamacare to further improve the delivery system so that it is both cost-efficient and care effective. Republicans must heed this important information and stop their efforts to end the Medicare guarantee, which would only place enormous additional costs on the backs of seniors and send our nation's health care costs dramatically higher. As the nation's economy recovers from the deep recession, we will continue to fight every attempt by Republicans to end Medicare's promise to every generation of Americans."

Ranking Member Stark: "Today's Medicare Trustees Report continues to show Medicare on sound financial footing, due mainly to the financial gains made by enactment of the Affordable Care Act. But, House Republicans don't let facts get in their way. Despite the positive status of Medicare, Republicans are continuing their quest to end Medicare as we know it -- not because the program is unsustainable, but because they want government out of the business of guaranteeing health care. I strongly oppose their efforts and will stand with America's seniors to protect Medicare as a guaranteed benefit."

Key Takeaways from the 2012 Medicare Trustees Report:

The Affordable Care Act Substantially Improved Medicare's Solvency. The 2012 Medicare Trustees Report projects a solvency date of 2024, the same projection as last year signaling a stable situation. In sharp contrast, the Republican agenda to repeal the ACA would slash eight years from the program's solvency, accelerating the date of insolvency to 2016, according to the Office of the Chief Actuary. The ACA took many steps to strengthen Medicare's fiscal outlook, including removing overpayments to private Medicare Advantage plans, improving provider payment accuracy, encouraging better coordination of care to minimize duplication of tests and improve outcomes, and empowering CMS with new tools to fight health care fraud.

Strengthened Long-Term Fiscal Situation Thanks to Reform. Medicare's long-term 75-year deficit is also dramatically improved, dropping from 3.88 percent before ACA's enactment to 1.35 percent now -- this means that the 75-year deficit can be closed with revenue increases or spending cuts (or a combination thereof) equivalent to a 1.35 percent increase in the payroll tax. Again, in sharp contrast, the Republican agenda to repeal the ACA would dramatically worsen Medicare's finances. While updated numbers are not yet available, the Medicare actuaries projected last year that if the ACA were repealed, eliminating the 75-year deficit would require a more than doubling of the payroll tax from 2.90-percent to 6.79 percent, or a significant reduction in expenditures. See: 2011 Medicare Actuaries Letter.

Trustees See Promise in ACA Delivery System Reforms. The Trustees also repeat positive statements about the potential of the delivery system reforms in ACA to improve quality and/or reduce costs, stating,

"The Affordable Care Act establishes a broad program of research into innovative new delivery and payment models in an effort to improve the quality and cost-effectiveness of health care for Medicare--and, by extension, for the nation as a whole. The projections in this year's annual report provide an unequivocal incentive to vigorously pursue the development of effective and sustainable new approaches, with the potential to make quality health care much more affordable."

House Republicans Will Politicize Trustees Report to Advance Their Plan to End Medicare. Republicans will likely seize on the 2012 Trustees Report to justify their plan to end Medicare by converting it to a voucher. The Republican voucher plan ends the program's guaranteed benefits and cuts spending on Medicare for new beneficiaries by more than $2,200 per person in 2030. Republicansare not newcomers to the strategy of politicizing the Trustees Report in order to advance a plan to undermine Medicare. In 1995, the then-Chairmen of the Republican National Committee, Haley Barbour, gleefully called the shortening of solvency under that year's Trustees Report, "manna from heaven," and used it to justify then-Speaker Gingrich's "Contract with America" to cut Medicare spending by 14 percent in order to provide tax breaks for the rich.

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