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Medicare "Trigger" Bill Doesn't See Whole Picture, Experts Say

By Christine Grimaldi, CQ Staff

March 6, 2008 -- Medicare "trigger" legislation that would place spending limits on the program to curb support from the general tax revenues does not look at the whole picture, health care experts said.

Yet an administration official added that the percentage of the general revenues used to fund Medicare will decrease on its own if the president's fiscal year 2009 budget is approved.

"The package that we submitted sort of complements the budget," said Julie Goon, special assistant to the president for economic policy in the National Economic Council, at the Kaiser Family Foundation on Thursday.

Its passage would see Medicare use 38 percent of the general revenues in 2013, and 39 percent in 2018, Goon said.

The Bush administration was required to send legislation to Congress by what is commonly known as the Medicare funding "trigger," a warning system put in place as part of the 2003 Medicare overhaul law (PL 108-173).

The law says that if, for two years in a row, Medicare is projected to draw 45 percent of its funding from general tax revenues in any of the next seven years, the president must propose legislation to solve the problem. The 45 percent threshold will be crossed in 2013, according to a warning issued by Medicare trustees in April.

Current Congressional Budget Office projections place Medicare's percentage of the general revenue at 45.1 percent in 2013 and 51 percent in 2018, said Director Peter Orszag. Projections for 2007 and 2008 are both at 41 percent.

The Congressional Budget Office is expected to score the legislation in the context of the trigger soon, Orszag said.

"This was a proposal that was really intended to signal that general revenues, which are a part of the funding of Medicare and have been from the very beginning, should have a limit in much the same way that the payroll tax is limited by law," said Marilyn Moon, vice president and director of the American Institutes for Research's Health Program. "But the irony of that is that I think that people got very much the opposite of what they wanted in many cases."

For instance, Moon said increased revenues in other parts of Medicare could cut down on overall spending, but both conservatives and liberals would likely balk at this idea.

"I think in many ways everyone should agree and do away with this trigger, but I'm not sure that that's what's going to happen," she said.

Moon turned to the reasons for the greater general revenue share: increased spending in the health care system, a shift from inpatient to outpatient care that fed Medicare's related Part B program, and measures within the "trigger" legislation itself to supplant the Part D drug benefit program from the general revenues.

AARP's John Rother identified the underlying problem of cost containment in health care and called for a system-wide examination of both private and public programs.

A trigger would be useful as a way to broadly examine Medicare—but not this trigger, said Rother, who is director of policy and strategy at AARP.

"If we were going to really look at Medicare's performance, we'd look at cost growth relative to private sector cost growth, we'd look at measures of quality and patient satisfaction, we'd look at burden on providers and participation in the program . . . not the balance between dedicated and non-dedicated financing sources," he said.

He noted that the trigger "is the product of one person's imagination"—that of former Rep. Bill Thomas, R-Calif., who as chairman of the House Ways and Means Committee advocated in 2006 for a 40 percent hard trigger. Subsequent negotiations over the Medicare bill led to the 45 percent soft trigger, "as a more or less figure pulled out of thin air," Rother said.

"Are these numbers somewhat arbitrary? More than likely," Goon said. "But they do sort of give an indication of how much money is coming out of the general revenue basket and being spent on Medicare and other health care programs to the detriment of spending in other parts of the government."

Goon said she agreed with almost all concerns raised, including that the trigger legislation is not an all-inclusive representation of Medicare. "Where I disagree is I don't think that we should make the perfect the enemy of the good," she said.

Democrats declared the measure dead on arrival. Edward M. Kennedy, D-Mass, chairman of the Senate Health, Education, Labor and Pensions Committee, said the administration had "trumped up a phony crisis in Medicare to justify proposing deep cuts in quality health care for seniors while giving massive subsidies to HMOs and other insurance companies."

Rep. John D. Dingell, D-Mich., chairman of the House Committee on Energy and Commerce, termed the Medicare trigger "little more than a scare tactic to promote cuts to the most successful program of our time."

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