Policy Documents

Time is Running Out for Medicare Reform

Stuart M. Butler –
April 30, 1997

In this Backgrounder, Stuart Butler argues that the Hospital Insurance (HI) Trust Fund, also known as Part A, literally will run out of money within about 48 months, early in 2001. This means that in 2001, under current law, the program will not be able to pay for all promised hospital benefits. After that year, the problem.will become progressively worse for the-foreseeable future. To put this in perspective, for families that buy a new car today, Medicare’s hospital fund will run out of cash before the typical car loan is paid off; or if a son is going to college this fall, Medicare will be bankrupt before he graduates. Moreover, although the last Congress passed reforms to restructure the program for the long term, President Clinton vetoed that legislation and Democrats denounced it in last year’s elections.