THE WHITE HOUSE

Office of the Press Secretary

MEDICARE TRUSTEES' REPORT: 1999

March 30, 1999

Today, the Medicare Trustees projected that the life of the Medicare Trust Fund has been extended until 2015 -- 7 years longer than projected in last year's report. This report affirms that the President's commitment to strengthening and improving Medicare is paying dividends, but it also underscores the need for additional action to strengthen and improve the program.

     The Trustees' Report on the Improved Financial Status of Medicare 
     is Good News and Reflects that the Hard Choices the President Made 
     in 1993 and 1997 Strengthened the Program and Were Justified.  
     When the President came into office, the Medicare program was 
     projected by the Trustees to go bankrupt by 1999.  The Trustees' 
     Report validates the President's economic policies.  It reports 
     that:  "income exceeded expectations as a result of robust 
     economic growth and expenditures declined due to implementation 
     of the Balanced Budget Act of 1997, low increases in health care 
     costs generally, and continuing efforts to combat fraud and 
     abuse."  In the last few years, the life of the Trust Fund has 
     been extended by a full 14 years and the actuarial deficit has 
     been cut by two-thirds.

     Good News Does Not Delay the Need for Decisive Action.  We are 
     proud of our stewardship of the Medicare program.  However, our 
     success does not in any way diminish the challenges facing 
     Medicare.  Under any scenario, enrollment in Medicare will climb 
     from 39 million to 47 million in 2010, and to 80 million by 2035. 
     As the Trustees' Report points out, "substantially greater changes 
     in income and/or outlays are needed, in large part as a result of 
     the impending retirement of the baby boom generation."

     The President's Proposal to Modernize Medicare and to Dedicate 15
     Percent of the Surplus to the Program is Clearly Necessary to
     Adequately Extend the Life of the Trust Fund and Add a Long 
     Overdue Prescription Drug Benefit.  While the financial well-being 
     of the Medicare program has improved, its reserves will become 
     exhausted just as the baby boom population begins to retire and 
     long before those of the Social Security program.  Moreover, 15 
     million beneficiaries have absolutely no prescription drug 
     coverage, millions more have totally inadequate coverage, and our 
     nation's elderly are paying excessively high costs for their 
     desperately needed medications.  The President's Medicare reform 
     proposal will address these unmet challenges.

     We Now Face A Historic Fiscal Choice:  Do we use the surplus to
     strengthen and modernize Medicare and keep the program solvent 
     further into the future OR do we use it to provide for an 
     exploding and irresponsible tax cut.  If we choose unwisely and 
     use the surplus to finance tax cuts -- rather than Social Security 
     and Medicare -- we will have made one of the most short-sighted 
     fiscal decisions in our nation's history.  Not only will we leave 
     two programs unacceptably weakened, but we will have given up on 
     an unprecedented opportunity to reduce our nation's debt from 44 
     percent of GDP to 7 percent by 2014 -- the lowest level since 1917.
     We must use this historic opportunity to strengthen Medicare by 
     devoting 15 percent of the budget surplus to this program over the 
     next 15 years and modernizing Medicare to help fund a prescription 
     drug benefit.

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