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Office of the Press Secretary

For Immediate Release June 29, 1999
                     MEDICARE FOR THE 21st CENTURY

                             June 29, 1999

Today, President Clinton will unveil his plan to modernize and strengthen the Medicare program to prepare it for the health, demographic, and financing challenges it faces in the 21st Century. This historic initiative would: (1) make Medicare more competitive and efficient; (2) modernize and reform Medicare's benefits, including the provision of a long-overdue prescription drug benefit and cost sharing protections for preventive benefits; and (3) make an unprecedented long-term financing commitment to the program that would extend the life of the Medicare Trust Fund until 2027. The President will call on the Congress to work with him to reach a bipartisan consensus on important reforms this year.

MAKING MEDICARE MORE COMPETITIVE AND EFFICIENT. Since taking office, President Clinton has worked to implement Medicare reforms that, coupled with the strong economy and the Administration's aggressive anti-fraud and abuse enforcement efforts, have saved hundreds of billions of dollars and helped to extend the life of the Medicare trust fund from 1999 through 2015. Building on this success, the plan he unveils today:

MODERNIZING MEDICARE'S BENEFITS. The current Medicare benefit package does not include all the services needed to treat health problems facing the elderly and people with disabilities. The President's plan would take strong new steps to ensure that Medicare beneficiaries have access to affordable prescription drug and preventive services that have become essential elements of high-quality medicine. It also addresses excess utilization and waste associated with first-dollar coverage of clinical lab services and reforms the current Medigap market. Finally, it integrates the President's Medicare Buy-In proposal to provide an affordable coverage option for vulnerable Americans between the ages of 55 and 65. His plan:

Most Medicare beneficiaries will choose this new prescription drug option because of its attractiveness and affordabilty. Because older and disabled Americans rely so heavily on medications, about 31 million beneficiaries would benefit from this coverage each year. Cost: $118 billion over 10 years, beginning in 2002.

STRENGTHENING MEDICARE'S FINANCING FOR THE 21ST CENTURY. The Medicare plan the President is proposing would strengthen the program and make it more competitive and efficient. However, no amount of policy-sound savings would be enough to handle the doubling of the elderly population from almost 40 million today to 80 million over the next three decades. Every respected expert recognizes that additional financing will be necessary to maintain basic services and quality for any length of time. The President believes that the baby boom generation should not pass along its inevitable Medicare financing crisis to its children. That is why he has proposed that a significant portion of the surplus be dedicated to strengthening the program. Specifically, his plan:

Policy experts advising the Congress (MedPAC, CBO, and the Medicare Trustees) have consistently underscored their belief that much of the recent decline in Medicare spending beyond initial projections is due to our success in combating fraud and waste. Reinvesting the savings that can be reasonably attributed to our anti-fraud and waste activities into a new prescription drug benefit is completely consistent with the past actions of the Congress and the Administration utilizing such savings for programmatic improvements.

                     MEDICARE FOR THE 21st CENTURY


(Dollars in Billions, Trustees' Baseline)

00-04 00-09


  Medicare Modernization        -5    -25
  Competition                   -0    -8
  Provider Savings              -4    -39*
  Provider Set-Aside            +4    +7.5

  Total                         -5    -64.5


  Prescription Drug Benefit     +29   +118
  Cost Sharing Changes          -2    -8

Total                           +27   +110


  Contribution to Solvency      -28   -328.5**
  Surplus for Drug Benefit      -22   -45.5

 Surplus Allocation             -50   -374