Former HHS Secretary Michael Leavitt says the new health reform law weakens the Medicare program and doesn't add life to the Medicare Part A trust fund. Leavitt, who now runs a health care and food safety consulting firm, called the Medicare Trustees' projection of the law extending the hospital insurance fund an "illusion" in an op-ed in The Washington Post on Friday.
Leavitt maintains that Medicare savings are being counted twice: once to improve the solvency of the Part A program and again to pay for other provisions in the Patient Protection and Affordable Care Act. "The Medicare cuts can be used to improve the government's capacity to finance benefits in the future or to pay for another entitlement," he writes. "But they can't be used for both -- a point the CBO and Medicare's actuaries made in their cost estimates."
Double counting has been an argument used to discredit savings produced by health care reform. The Congressional Budget Office (CBO) addressed this issue in a letter about Medicare's hospital insurance fund to Sen. Jeff Sessions (R-Ala.) in January. CBO director Douglas Elmendorf more succinctly articulated the impact of the health care reform law in a presentation to the World Health Care Congress on April 12:
The health reform legislation improves cash flow in the HI trust fund by more than $400 billion over 10 years. Higher balances in the fund will give the government legal authority to pay Medicare benefits longer, but most of the money will pay for new programs and will not enhance the government's economic ability to pay Medicare benefits. (There is a much smaller effect of this sort on Social Security.)
Still, other groups say the double-counting claim is "without merit." The "socially liberal, fiscally conservative, and academically rigorous" Center of Budget and Policy Priorities says:
The outlooks for the budget and for the HI trust fund are two very different things, but under longstanding federal budget and accounting rules, changes in HI affect both. The Congressional Budget Office has estimated that the Affordable Care Act will reduce the federal deficit by $143 billion over the 2010-2019 period and by approximately $1.3 trillion in 2020-2029. At the same time, the trustees' report confirms that health reform has also extended the life of the HI trust fund by more than a decade. No double-counting occurs here.
Deficit-reduction legislation that includes Medicare provisions has been accounted for in exactly the same way in previous Congresses under both political parties. For example, both the Balanced Budget Act of 1997 and the Deficit Reduction Act of 2005 (both of which were passed by Republican Congresses) included Medicare savings that reduced the federal deficit and improved the solvency of Medicare's HI trust fund. No claims of double-counting were raised when these bills were enacted. Similarly, the Social Security Amendments of 1983 reduced the budget deficit at the same time as they improved the solvency of the Social Security trust funds.