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Medicare Trustees Report Shows Unprecedented Progress Under the Clinton-Gore Administration March 30, 2000

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The Briefing Room

Office of the Press Secretary

For Immediate Release March 30, 2000

March 30, 2000

Today, the Medicare Trustees projected that the life of the Medicare Trust Fund has been extended until 2023 -- 8 years longer than had been projected last year. This is a historic change from 1993 when the President came into office and received the Trustees report projecting that Medicare would become insolvent in 1999. In welcoming this news, the President highlighted the Administrationís stewardship of Medicare which has resulted in the longest Medicare Trust Fund solvency in a quarter century and premiums that are nearly 20 percent lower today than projected in 1993. He pointed out, however, that Medicare still faces daunting demographic and health challenges. It is projected to become insolvent in the middle of the retirement of the baby boom generation. And, unlike virtually every private health plan, Medicare still does not cover outpatient prescription drugs. The President also emphasized his comprehensive plan to make Medicare more competitive and efficient; modernize its benefits including adding a voluntary prescription drug benefit; and dedicating part of the on-budget surplus to meeting the future financial shortfall. Based on preliminary analysis, these policies are projected to extend the life of Medicare beyond 2030. The Presidentís Medicare plan is part of his fiscally disciplined framework to strengthen Social Security, invest in key priorities, and pay off the debt held by the public by 2013.


  • Best Solvency Status in a Quarter Century. When the President came into office, the Medicare program was projected by the Trustees to go bankrupt by 1999. The Medicare Trustees project that the life of the Medicare Trust Fund has been extended by 8 years, to 2023, and that its actuarial deficit -- a measure of long-run solvency -- has been reduced to 1.21 percent of taxable payroll, an 76 percent decline from 1993. Todayís announcement means Medicare is now in the soundest shape it has been since 1975.
  • Medicare Premiums for a Couple Are $200 Lower This Year Than They Were Estimated to Be in the 1993 Trusteesí Projections. The Presidentís leadership has not only resulted in an improved Trust Fund, but lower monthly premiums for seniors. In 1993, the projected Part B premium for 2000 was $54.50. Today, it is actually $45.50 per month. This is $9 less per month -- a 17 percent decrease from the Trusteesí 1993 projections. For an elderly couple, this is an annual savings of over $200.
  • Improved Financial Status of Medicare Reflects the Presidentís Economic and Medicare Program Management Policies. The Presidentís leadership in strengthening the economy and constraining inflation, as well as Medicareís success in modernizing payments and combating fraud and waste, has resulted in a strong and fiscally stable program. The improvements in the Trusteesí Report confirm the soundness of the Administrationís economic and management policies.
  • Major Health and Demographic Challenges Remain. While significant, the Administrationís recent success in extending the life of the Medicare Trust Fund does not meet the full challenges facing Medicare. The Trusteesí Report projects that enrollment in Medicare will double from 39 million in 1999 to 81 million by 2035. Equally important, Medicareís benefits have not kept pace with modern medicine. Medicare does not cover prescription drugs and, as a result, 3 in 5 Medicare beneficiaries lack dependable prescription drug coverage. Most of these beneficiaries who need prescription drug coverage are in the middle class, with income between 150 and 400 percent of poverty ($12,525 to $33,400 for a single elderly person).
PRESIDENTíS PLAN TO STRENGTHEN AND MODERNIZE MEDICARE. The Presidentís FY2001 budget dedicates $432 billion over 10 years -- over half of the on-budget surplus -- to strengthen and modernize Medicare to prepare it for the health, demographic, and financing challenges of the 21st Century, extending its solvency to at least 2030. This plan would:
  • Make Medicare more efficient and competitive. The Presidentís plan adds price competition and successful private-sector management tools to Medicare. These policies manage cost growth and allow flexibility to adopt innovative private practices to improve quality and efficiency.
  • Modernize benefits, including adding a prescription drug benefit. The Presidentís plan creates a voluntary prescription drug benefit that is accessible and affordable for all beneficiaries, and is managed competitively and efficiently. It provides high-quality, needed medications. It also creates a reserve fund that permits the Administration to work with Congress to design protections for catastrophic drug costs. If no consensus emerges, the reserve would be used for debt reduction.
  • Dedicate non-Social Security surplus to Medicare. Without new financing, excessive and unsupportable provider payment cuts or beneficiary cost sharing increases would be needed. The President proposes to dedicate $299 billion over 10 years from the non-Social Security surplus to the Medicare Trust Fund, improving its financing and reducing debt.

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