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Tuesday, April 17, 2012

Medicare Trigger

Patricia A. Davis
Specialist in Health Care Financing

Christopher M. Davis
Analyst on the Congress and Legislative Process

Todd Garvey
Legislative Attorney

The Medicare Prescription Drug, Improvement and Modernization Act of 2003 (MMA, P.L. 108- 173) requires the Medicare Board of Trustees to provide in its annual reports an expanded analysis of Medicare expenditures and revenues (§801 of MMA). Specifically, if the trustees determine that general revenue funding for Medicare is expected to exceed 45% of Medicare outlays for the current fiscal year or any of the next six fiscal years, a determination of excess general funding is made. If the determination is issued for two consecutive years, a funding warning is issued which triggers certain presidential and congressional actions (§802-§804 of MMA).

Because such a determination was issued in both the 2006 and 2007 Medicare Trustee’s reports, the President was required to submit a legislative proposal to Congress within 15 days of submitting his budget in 2008 that would lower the ratio to the 45% level. Similarly, each of the subsequent Annual Reports of the Boards of Trustees through 2011 has included an estimate that general revenue funding would exceed 45% during the next seven years, thus “triggering” a response from the President and Congress. While such a proposal was submitted by President George W. Bush in 2008, no such legislative proposals have been submitted since that time. The House approved rules changes for a portion of the 110th Congress (H.Res. 1368) and for all of the 111th Congress ( H.Res. 5) that waived the parliamentary procedures for the House contained in Section 803 of the MMA. The 112th Congress has not passed a similar measure, and the trigger provision has gone back into effect in the House.

The Medicare funding warning focuses attention on the impact of program spending on the federal budget, and provides one measure of the financial health of the program. However, some options for reducing general revenue spending below the 45% level would have a greater impact than others. Proponents of the trigger maintain that it forces fiscal responsibility, while critics of the trigger suggest that other measures of Medicare spending, such as total Medicare spending as a portion of federal spending, would be more useful indicators.

Date of Report: April 9, 2012
Number of Pages: 13
Order Number: RS22796
Price: $29.95

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