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CBO Increases Estimate of Medicare Part A Trust Fund Surplus By $175 Billion The new report from the Congressional Budget Office (CBO) could make it easier for Congress to take action on adding prescription drug coverage to Medicare. The latest CBO report indicates that the Medicare Part A Hospital Insurance Trust Fund is growing far more quickly than earlier projections estimated just one year ago. The 2000 estimates show a whopping $175 billion more in the Trust Fund over the next 10 years, primarily because Medicare spending is proving lower than previously expected. The report states, “the Medicare Hospital Insurance fund generates surpluses through 2007 and runs total surpluses throughout the 2001-2010 period.” The CBO attributes the lower Medicare spending to a clamp-down on waste, fraud, and abuse within the Medicare system and a larger than anticipated drop in the use of home health care services. At the same time, record-high employment levels are generating higher than expected Medicare payroll tax revenues. Only one month after the release of CBO's new report however, David Walker, the U.S. Comptroller General, testified before a Senate hearing on adding prescription drug coverage to Medicare that the program is “in the red and has been since 1992.” Walker provided similar testimony in at least four prescription drug hearings since September of 1999. He explained that “earmarked payroll taxes cover only 89% of Medicare Part A spending and the fund is projected to have a $7 billion cash deficit for fiscal year 1999 alone.” Walker's testimony before House and Senate hearings on prescription drug benefits relied on the findings of the outdated 1999 Medicare Trustees Report, despite more current data from the CBO showing a surplus. The 2000 Medicare Trustees Report released in March was even more positive than the CBO stating the Medicare Part A Trust Fund would increase by more than $249 billion over the next 10 years. There was a $21 billion surplus in 1999 rather than a $7 billion deficit as Walker testified. Some political observers questioned why Walker's testimony was repeatedly introduced in hearings on prescription drugs, charging that the erroneous data may have been an attempt to stall the debate.
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