ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Monday, April 29, 1996 TAG: 9604290133
SECTION: NATIONAL/INTERNATIONAL PAGE: A1 EDITION: METRO
DATELINE: WASHINGTON
SOURCE: THE WASHINGTON POST
The Medicare trust fund that pays hospital bills for 37 million elderly and disabled people will go bankrupt sooner and accumulate far deeper deficits over the next decade than previously projected by the fund's trustees, according to a new estimate by the Congressional Budget Office.
The new numbers appear to lend support to Republican charges that the Medicare hospital trust fund is deteriorating faster than had been realized and that steps must be taken quickly to arrest the decline.
But part of the differences between the earlier estimates and the new CBO forecast may result from CBO's use of different assumptions about the economy's overall performance over the period from those used by the Medicare actuaries and the CBO itself in the past.
Smaller-than-expected collections from the payroll tax that feeds the trust fund and unexplained higher hospital admission rates for Medicare enrollees may be the cause of the changed outlook, sources said.
``The trust fund is in dramatically worse shape than we were told by the administration, and the president ought to submit a new plan that solves the problem,'' said Rep. Bill Thomas, R-Calif., chairman of the House Ways and Means subcommittee on Medicare. He said he will hold a news conference today and a hearing Tuesday on the new CBO projections.
Laura D'Andrea Tyson, chairwoman of the president's National Economic Council, disputed any suggestion that President Clinton is not seeking ways to keep the fund solvent.
``The president's balanced-budget proposal contains enough Medicare savings to extend the life of the trust fund for a decade from now,'' Tyson said in a statement issued by the White House. ``This report simply shows how important it is for the Republicans to accept the president's invitation to resume serious balanced-budget negotiations.''
A more sharply deteriorating financial situation in the Medicare trust fund not only would pose a more immediate threat to health benefits for beneficiaries, but also would make it harder to balance the federal budget early in the next century. The new CBO projection expects the Medicare trust fund to be in the red in 2001, a year earlier than previously projected.
A report of the Medicare trustees, who include three Clinton Cabinet members, will be issued in about a month. Several sources said that because CBO develops its estimates from information it gets from Medicare actuaries, it is likely the annual report on the trust fund will have figures similar to CBO's.
Republicans and Democrats fought a series of political battles in 1995 about cuts in the growth of Medicare. Republicans initially proposed to slow program growth by $270 billion over seven years - a target that has since been reduced to $168 billion - and Clinton countered with $124 billion. At that time, it was thought the hospital trust fund would become insolvent sometime after fiscal 2002.
The Republicans said their plan, passed as part of the balanced-budget bill that Clinton vetoed, would have kept the trust fund solvent until 2012 or later. The White House plan was estimated to keep the fund in the black until 2006. The president accused the GOP of cutting the growth in projected Medicare spending far more than was immediately necessary because the GOP needed the spending savings to offset the costs of tax cut that the president said would go mainly to the well-to-do. The GOP responded that Clinton was trying to score electoral points with the elderly.
At the end of fiscal 1997 - on Sept. 30, 1997 - there will be $109 billion in the fund, according to the CBO's latest figures. But by the end of fiscal 2001, the trust fund will have a deficit of $28.9 billion because of rising costs.
LENGTH: Medium: 71 linesby CNB