Number: RS22796
Title: Medicare Trigger
Authors: Hinda Chaikind, Specialist in Health Care Financing; Christopher M. Davis, Analyst on the Congress and Legislative Process 
Abstract: A determination of excess general funding, as required by §801 of P.L. 108-173, the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (MMA), is issued if general revenue Medicare funding is expected to exceed 45% of Medicare outlays for the current fiscal year or any of the next six fiscal years. If the determination is issued for two consecutive years, a warning is issued requiring certain presidential and congressional action (§802-§804 of MMA). The warning alerts policy makers of one measure of the financial health of Medicare. It attempts to focus on the impact of Medicare revenues and outlays on the federal budget, by looking at Medicare's burden on the Treasury. Because such a determination was issued in both the 2006 and 2007 Medicare Trustee's reports, in 2008, the President was required to submit a legislative proposal to Congress to lower the ratio to the 45% level. Similarly, the 2008 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds included an estimate that general revenue funding would exceed 45% in 2014, creating a new warning, based on the estimates of excess general revenues for 2007 and 2008. As a result of this new warning, in 2009, the President will be required to submit a legislative proposal to Congress to lower the ratio to the 45% level. Some options for reducing general revenue spending below the 45% level would have a greater impact than others.
Pages: 6
Date: January 15, 2009