Medicare Savings for Health Care: Can Congres Stay the Course?

With the President’s commitment that health care legislation will not increase the deficit, the savings included in any bill must be durable. Because large amounts of the savings proposed come from Medicare, it is useful to review the history of previously enacted Medicare reductions.

As it turns out, roughly one-third of the $390 billion in savings enacted in the Balanced Budget Act of 1997 have since been reversed (see Table 1 below) – and with bipartisan support. In addition, Democratic-led Congresses have twice turned off a “trigger” mechanism, established in the Medicare prescription drug bill, that would have required savings when Medicare’s financial instability crossed a defined threshold. The pattern makes clear that Congress often backs away from Medicare savings even after they have been enacted – an important recognition in the current health care debate.

The discussion below details the recent history.

Read the full report here.