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Need for Medicare Reform

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“This report is the most compelling evidence to date that we must strengthen and modernize Medicare for the long run.”

President Bill Clinton
February 29, 2000

Today at the White House, President Clinton released a new report which gives a state-by-state snapshot of the unprecedented demographic and health care challenges confronting Medicare. The report documents the success of the current program and provides new information on its impact on women, Americans over the age of 85, and rural beneficiaries. The President urged Congress to move ahead this year to modernize and strengthen Medicare and include in its reforms a long-overdue voluntary prescription drug benefit.

State-By-State Report Shows Need For Reform. Findings of the report, called America's Seniors and Medicare: Challenges for Today and Tomorrow, include the following:

  • Poverty among the elderly has been reduced by nearly two-thirds since Medicare was created;
  • Medicare provides critical health care to 38 million Americans;
  • Women beneficiaries outnumber men in all states;
  • 10 percent of beneficiaries in 40 states are age 85 or older;
  • In 15 states, over half of Medicare beneficiaries live in rural areas. Beneficiaries living in rural areas nationwide typically have few to no options for managed care or prescription drug coverage;
  • Medicare enrollment will surge: about 62 million Americans will be age 65 or older in 2025, compared to 35 million today;
  • In 2025, there will be 30 states with an elderly population that is at least 20% of the total population – compared to no states today;
  • 6 million Americans nationwide age 55 to 65 are uninsured or have undependable health insurance. They are the fastest growing group of uninsured – and are at great risk of becoming sick;
  • Retiree health coverage is declining: nationally, only 22% of firms offer health insurance to retirees over age 65;
  • Individual Medigap insurance with prescription drug coverage costs twice as much in high-cost states;
  • Most seniors are middle income and would not benefit from a low-income prescription drug benefit; and
  • Health care providers rely on over $200 billion a year in Medicare spending, accounting for one-fifth of all funding.

Working to Strengthen and Modernize Medicare. The President's FY 2001 budget dedicates $432 billion over 10 years to Medicare. His plan to strengthen and modernize the program includes:

  • Making Medicare more competitive and efficient, expanding anti-fraud policies, and constraining out-year program growth - reforms which are projected to save $71 billion over 10 years;
  • Dedicating $299 billion over 10 years to help extend the solvency of the Trust Fund through 2025, and reducing publicly held debt by preventing funds from being used for tax cuts or new spending;
  • Modernizing Medicare's benefits by establishing a voluntary, affordable prescription drug benefit; creating a Medicare reserve fund to add protections for catastrophic drug costs; and eliminating the existing deductible and copayments for preventive services; and
  • Creating a Medicare buy-in option for people ages 55 to 65 and expanding COBRA access to early retirees.

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