Unsustainable Medicare spending

Introduction

“Medicare shouldn’t be a political issue,” said then-Governor George W. Bush at a presidential campaign rally in 2000. “It’s time to reform Medicare.” But as president, Bush was unable to deliver on that pledge, and Congress seemed disinclined to address the subject of Medicare either — even though projected spending growth is clearly unsustainable, thanks in part to the aging of the population. Spending on Medicare nearly doubled over the course of the Bush administration, hitting $431.5 billion in 2007, and the program’s financing is slated to run into major trouble by 2012.

According to projections by the Congressional Budget Office, Medicare spending is expected to jump from 4 percent of the Gross Domestic Product in 2007 to 12 percent in 2050. Warned Health and Human Services (HHS) Secretary Michael Leavitt in February 2008: “Left unchanged, within 35 years Medicare would eat up every bit of the federal budget as we now know it.” In response to spending alarms triggered by a 2003 law, the administration proposed legislation to rein in Medicare spending, but Congress voted in July to shelve the effort. Jeff Nelligan, director of media affairs at the Centers for Medicare and Medicaid Services, told the Center that the Bush administration has tried hard to control the rate of Medicare spending, but said attempts to reform even the smallest piece of Medicare have met resistance from Congress.

Follow-up:
Former HHS Secretary Tommy Thompson has argued that only a bipartisan commission can navigate the politics to find a solution to Medicare. President-Elect Obama has said his administration plans to “reduce waste in the Medicare system — in part by eliminating subsidies to the private insurance Medicare Advantage program.” But he also said in late November that budgetary “reform” must be part of a stimulus package, leading some to speculate that systematic Medicare reform might get an earlier-than-expected examination from the new president.