Medicare: History of Insolvency Projections

Patricia A. Davis
Specialist in Health Care Financing

Medicare is the nation’s health insurance program for persons age 65 and older and certain disabled persons. Medicare consists of four distinct parts: Part A (Hospital Insurance, or HI); Part B (Supplementary Medical Insurance, or SMI); Part C (Medicare Advantage, or MA); and Part D (the outpatient prescription drug benefit). The Part A program is financed primarily through payroll taxes levied on current workers and their employers; these are credited to the HI trust fund. The Part B program is financed through a combination of monthly premiums paid by current enrollees and general revenues. Income from these sources is credited to the SMI trust fund. As an alternative, beneficiaries can choose to receive all their Medicare services through private health plans under the MA program; payment is made on their behalf in appropriate parts from the HI and SMI trust funds. The Part D drug benefit is funded through a separate account in the SMI trust fund and is financed through general revenues, state contributions, and beneficiary premiums. The HI and SMI trust funds are overseen by a board of trustees that makes an annual report to Congress concerning the financial status of the funds.

Almost from its inception, the HI trust fund has faced a projected shortfall. The insolvency date has been postponed a number of times, primarily due to legislative changes that have had the effect of restraining growth in program spending. The 2010 Medicare trustees report projects that, under intermediate assumptions, the HI trust fund will become insolvent in 2029, 12 years later than projected in the 2009 report primarily due to provisions in the Patient Protection and Affordable Care Act (PPACA, P.L. 111-148) that are expected to increase revenues from payroll taxes and decrease HI expenditures. This report is a supplement to CRS Report R41436, Medicare Financing, which discusses the findings from the 2010 trustees report. Both reports will be updated upon receipt of the trustees 2011 report. .


Date of Report: February 16, 2011
Number of Pages: 13
Order Number: RS20946
Price: $29.95

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Medical Malpractice Insurance and Health Reform

Baird Webel
Specialist in Financial Economics

Vivian S. Chu
Legislative Attorney

Bernadette Fernandez
Specialist in Health Care Financing

Medical malpractice liability insurance has attracted congressional attention numerous times over the past few decades, particularly in the midst of three “crisis” periods in the mid-1970s, the mid- 1980s, and the early 2000s. These crises were marked by sharp increases in physicians’ liability insurance premiums, difficulties in finding any insurance in some areas as insurers withdrew from providing coverage, reports of physicians leaving areas or retiring following insurance difficulties, and a variety of public policy measures at both the state and federal levels to address the crises. Which public policy measures have been effective in addressing the successive insurance crises has been a matter of debate, in part because these crises have been at the intersection of the health care, tort, and insurance systems.

Currently, the medical liability insurance market is not exhibiting crisis symptoms. Over the past few years, losses incurred by medical malpractice insurers have dropped dramatically and premiums paid have fallen, albeit more modestly. Problems with the affordability and availability of malpractice insurance persist but are less acute compared with other time periods. Even during a non-crisis period, the current malpractice system experiences issues with equity and access. For example, some observers have criticized the current system’s performance with respect to compensating patients who have been harmed by malpractice, deterring substandard medical care, and promoting patient safety. Yet there are differing opinions as to the extent that each of these particular areas has been affected by the current malpractice system.

The latest legislative interest in medical malpractice reform differs from the past in that it is largely driven by overall health reform, rather than an immediate crisis in medical malpractice insurance. In terms of direct costs, medical malpractice insurance adds relatively little to the cost of health care. According to the National Association of Insurance Commissioners (NAIC), medical malpractice premiums written in 2009 totaled approximately $10.8 billion, while health expenditures are estimated by the Congressional Budget Office (CBO) to total $2.6 trillion. Indirect costs, particularly increased utilization of tests and procedures by physicians to protect against future lawsuits (“defensive medicine”), have been estimated to be much higher than direct premiums. These conclusions, however, are controversial, in part because synthesis studies have claimed that national estimates of defensive medicine are unreliable.

The recently enacted Patient Protection and Affordable Care Act (P.L. 111-148) included language that allows states to receive grants to enact and implement alternatives to tort litigation. In the 112th Congress, H.R. 2, which would repeal P.L. 111-148, passed the House on January 19, 2011. In addition, the House Committee on the Judiciary held a hearing on medical liability reform on January 20, 2011, and held a markup of H.R. 5, the Help Efficient, Accessible, Lowcost, Timely Healthcare (HEALTH) Act of 2011, on February 8, 2011. Among other things, the HEALTH Act would implement a cap on non-economic damages for health care lawsuits.


Date of Report: February 11, 2011
Number of Pages: 12
Order Number: R40862
Price: $29.95

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Health-Related Revenue Provisions in the Patient Protection and Affordable Care Act(PPACA)

Janemarie Mulvey
Specialist in Aging and Income Security

The Patient Protection and Affordable Care Act (PPACA; P.L. 111-148 as amended) will, among other things, raise revenues to pay for expanded health insurance coverage by imposing excise taxes and fees on industries in the health care sector, limiting tax-advantaged health accounts, increasing taxes on upper income households through the Medicare payroll tax and adding an additional tax on net investment income. The new law will also eliminate the tax deduction for expenses allocable to the Medicare Part D subsidy to employers.

In the 112th Congress, the House passed H.R. 2, which would repeal PPACA. However, the Senate voted against an amendment to S. 223 to repeal PPACA. In addition, on January 20, 2011, the House passed H.Res. 9, which instructs the Ways and Means, Energy and Commerce, Judiciary, and Education and Workforce Committees to report legislation replacing aspects PPACA under their jurisdiction. In addition, several lawsuits have been filed that challenge the minimum essential coverage requirement on constitutional grounds. Most recently, on January 31, 2011, the district court in the case of Florida vs. Health and Human Services held that the minimum essential coverage requirement in PPACA is unconstitutional, and struck down the law in its entirety. Many expect that one or more of these cases will reach the Supreme Court.

This report summarizes the health-related revenue provisions in PPACA, their effective dates, and where data are available, potential impacts of these provisions.


Date of Report: February 10, 2011
Number of Pages: 14
Order Number: R41128
Price: $29.95

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Indian Health Care: Impact of the Patient Protection and Affordable Care Act (PPACA)

Elayne J. Heisler
Analyst in Health Services

On March 23, 2010, President Obama signed into law a comprehensive health care reform bill, the Patient Protection and Affordable Care Act (PPACA; P.L. 111-148). The law, among other things, reauthorizes the Indian Health Care Improvement Act (P.L. 94-347, IHCIA), which authorizes many programs and services provided by the Indian Health Service (IHS). In addition, it makes several changes that may affect American Indians and Alaska Natives enrolled in and receiving services from the Medicare, Medicaid, and State Children’s Health Insurance Program (CHIP)—also called Social Security Act (SSA) health benefit programs, and it includes changes to private health insurance that may affect American Indians and Alaska Natives and may affect tribes that offer private health insurance.

IHCIA authorizes many IHS programs and services, it sets out the national policy for health services administered to Indians, and it articulates the federal goal of ensuring the highest possible health status for Indians, including urban Indians. In addition, it authorizes direct collections from Medicare, Medicaid, and other third-party insurers. Prior to PPACA, IHCIA was last reauthorized in FY2000, although programs have received appropriations since that time. PPACA reauthorizes IHCIA and extends authorizations of appropriations for IHCIA programs indefinitely. It amends a number of sections of IHCIA in general, to permit tribal organizations (TOs) and urban Indian organizations (UIOs) to apply for contract and grant programs for which they were not previously eligible; to create new mental health prevention and treatment programs, including new youth suicide prevention programs; and to require demonstration projects to construct modular and mobile health facilities in order to expand health services available through IHS, Indian Tribes (ITs), and TOs. It also made several organizational changes to IHS. It requires IHS to establish an Office of Direct Service Tribes to serve tribes that receive their health care and other services directly from IHS as opposed to receiving services through IHS-funded facilities or programs operated by ITs or TOs. In addition, the law requires IHS to develop a plan to establish a new area office to serve tribes in Nevada and requires the Secretary of the Department of Health and Human Services (HHS) to appoint a new IHS Director of HIV/AIDS Prevention and Treatment.

In addition to reauthorizing IHCIA, PPACA includes a number of provisions that may affect American Indians and Alaska Natives who receive services through SSA health benefit programs or who have private insurance coverage. With regard to SSA health benefit programs, the new law permits specified Indian entities to determine Medicaid and CHIP eligibility and extends the period during which IHS, IT, and TO services are reimbursed for all Medicare Part B services, indefinitely, beginning January 1, 2010. Prior to PPACA, authority for these facilities to receive Medicare Part B reimbursements for certain specified services had expired on January 1, 2010. With regard to private insurance coverage, PPACA provides a special enrollment period for American Indians and Alaska Natives who may enroll in private insurance offered through an exchange and excludes tribal health benefits from being counted as gross income for tax purposes.

This report, one of a series of CRS products on PPACA, summarizes some of the key changes made in the reauthorization of IHCIA and summarizes other changes included in PPACA that may affect American Indian and Alaska Native health and health care. Another report, CRS Report R41630, The Indian Health Care Improvement Act Reauthorization and Extension as Enacted by PPACA: Detailed Summary and Timeline, by Elayne J. Heisler, provides a detailed section-by-section of the IHCIA Reauthorization and Extension Act of 2009.


Date of Report: February 10, 2011
Number of Pages: 16
Order Number: R41152
Price: $29.95

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Public Health and Emergency Preparedness: CRS Experts

Sarah A. Lister
Specialist in Public Health and Epidemiology

The following table provides access to names and contact information for CRS experts on policy concerns relating to public health and emergency preparedness. Policy areas identified include 

• public health and medical system preparedness and response; 
• legal issues in preparedness and response; 
• medical countermeasures; 
• homeland security research and development; and 
• health effects of threat agents.

Date of Report: February 10, 2011
Number of Pages: 4
Order Number: R40904
Price: $19.95

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Document available via e-mail as a pdf file or in paper form.
To order, e-mail Penny Hill Press  or call us at 301-253-0881. Provide a Visa, MasterCard, American Express, or Discover card number, expiration date, and name on the card. Indicate whether you want e-mail or postal delivery. Phone orders are preferred and receive priority processing.

Medical Malpractice Insurance and Health Reform

Bernadette Fernandez
Specialist in Health Care Financing

Baird Webel
Specialist in Financial Economics

Vivian S. Chu
Legislative Attorney

Medical malpractice liability insurance has attracted congressional attention numerous times over the past few decades, particularly in the midst of three “crisis” periods in the mid-1970s, the mid- 1980s, and the early 2000s. These crises were marked by sharp increases in physicians’ liability insurance premiums, difficulties in finding any insurance in some areas as insurers withdrew from providing coverage, reports of physicians leaving areas or retiring following insurance difficulties, and a variety of public policy measures at both the state and federal levels to address the crises. Which public policy measures have been effective in addressing the successive insurance crises has been a matter of debate, in part because these crises have been at the intersection of the health care, tort, and insurance systems.

Currently, the medical liability insurance market is not exhibiting crisis symptoms. Over the past few years, losses incurred by medical malpractice insurers have dropped dramatically and premiums paid have fallen, albeit more modestly. Problems with the affordability and availability of malpractice insurance persist but are less acute compared with other time periods. Even during a non-crisis period, the current malpractice system experiences issues with equity and access. For example, some observers have criticized the current system’s performance with respect to compensating patients who have been harmed by malpractice, deterring substandard medical care, and promoting patient safety. Yet there are differing opinions as to the extent that each of these particular areas has been affected by the current malpractice system.

The latest legislative interest in medical malpractice reform differs from the past in that it is largely driven by overall health reform, rather than an immediate crisis in medical malpractice insurance. In terms of direct costs, medical malpractice insurance adds relatively little to the cost of health care. According to the National Association of Insurance Commissioners (NAIC), medical malpractice premiums written in 2009 totaled approximately $10.8 billion, while health expenditures are estimated by the Congressional Budget Office (CBO) to total $2.6 trillion. Indirect costs, particularly increased utilization of tests and procedures by physicians to protect against future lawsuits (“defensive medicine”), have been estimated to be much higher than direct premiums. These conclusions, however, are controversial, in part because synthesis studies have claimed that national estimates of defensive medicine are unreliable.

The recently enacted Patient Protection and Affordable Care Act (P.L. 111-148) included language that allows states to receive grants to enact and implement alternatives to tort litigation. In the 112th Congress, H.R. 2, which would repeal P.L. 111-148, passed the House on January 19, 2011. In addition, the House Committee on the Judiciary held a hearing on medical liability reform on January 20, 2011, and H.R. 5, the Help Efficient, Accessible, Low-cost, Timely Healthcare (HEALTH) Act of 2011, was introduced shortly thereafter on January 24, 2011. Among other things, the HEALTH Act would implement a cap on non-economic damages for health care lawsuits.


Date of Report: February 8, 2011
Number of Pages: 12
Order Number: R40862
Price: $29.95

Follow us on TWITTER at http://www.twitter.com/alertsPHP or #CRSreports

Document available via e-mail as a pdf file or in paper form.
To order, e-mail Penny Hill Press  or call us at 301-253-0881. Provide a Visa, MasterCard, American Express, or Discover card number, expiration date, and name on the card. Indicate whether you want e-mail or postal delivery. Phone orders are preferred and receive priority processing.