Reform - Medicare Cap (Copyright, Center for Medicare Advocacy, Inc.)

ALERT! MEDICARE CONFEREES CONSIDER PLACING NEW OVERALL CAP ON MEDICARE EXPENDITURES

On November 4, 2003, the New York Times contained an article by Robert Pear about a proposal to limit spending for Medicare. As described in the NY Times article, the implications of this proposed cost-containment provisions on all Medicare spending, are truly breath-taking.

According to the article the Conferees are considering placing a cap on Medicare if 45% of general revenues have been expended. This extreme idea was not debated or voted on by either house of Congress. The 45% figure cited in the NY Times article ( Congress would have to act if more than 45% of Medicare spending comes from general revenue) is arbitrary and bears no relationship to any figure. No such cap on expenditures out of general revenue is applied to any other program. Recent figures from the Commonwealth Fund don't paint a bleak picture about Medicare's economic status.

According to the Center on Budget and Policy Priorities, the proposal also redefines Medicare insolvency. Under the new calculations, which again are arbitrary, the actuaries will be able to say next March that the Medicare deficit is three times greater than current projections, causing fear about the future of Medicare and paving the way for further cuts.

If this provision is enacted, Congress will cap all Medicare expenditures, and Medicare will no longer be an entitlement program. Beneficiaries will have to pay more out of pocket, and may lose access to covered services.

Many people have supported the proposed prescription drug bill even though the benefit isn't generous. They argue that it’s a first step and that improvements can be made - like closing the "doughnut hole" in coverage - in the future. If this provision to cap all Medicare expenditures is part of the bill, however, there won't be the money or the opportunity to improve the drug benefit. In order to get a better drug benefit, beneficiaries would have to agree to cuts in other existing benefits.

The Leadership Council of Aging Organizations has sent Congress a letter opposing a cap on overall Medicare expenditures. It is imperative that this brand-new, dramatic notion is closely followed. Beneficiaries and policy-makers must seriously consider the value of accepting an overall Medicare-cap in exchange for a very limited prescription drug benefit.