CBO: Senate Reform Bill Would Extend Life of Medicare Part A Payments

If Congress enacts the Senate healthcare reform bill (HR 3590), the legislation could extend the life of the Medicare Hospital Insurance (HI) trust fund—or Medicare Part A—well beyond fiscal 2017, according to a new review by the Congressional Budget Office (CBO). Fiscal 2017 is the year when officials predict Part A's fund would be exhausted.

Enacting that bill, plus including the manager's amendment, could reduce net outlays for Medicare Part A by $245 billion over the 2010-2019 period relative to that baseline, CBO said, in response to a question from Sen. Jeff Sessions (R-AL). Part of the reason is that enacting the legislation would also increase HI payroll tax receipts by about $113 billion over that period.

According to estimates by CBO and Joint Committee on Taxation staffers, these changes in outlays and revenues would diminish budget deficits and add to trust fund balances by $358 billion over that 10 year period between 2010-2019. Given those changes to the trust fund's financial flows, CBO estimates that the HI trust fund would have a positive balance of about $170 billion at the end of fiscal 2019.

At the same time, enacting the Senate bill would reduce debt held by the public at the end of 2019 by more than $132 billion through increased revenues and reduced direct spending, plus interest savings from the smaller debt during the 10 year period, according to CBO.

Therefore, enacting the Senate bill would increase debt held by government accounts more than it would decrease debt held by the public—and would thus increase gross federal debt. However, that measure of debt "conveys little information about the federal government's future financial burdens and has little economic meaning," CBO said.