An Overdue Budget Reform: Prohibit Double-Counting of Medicare Savings | Economics21

Some reforms, however, might be especially worthwhile insofar as they would simply make it more likely that budget results conform to lawmakers’ manifest intent. This piece will describe one such concept. In essence, it would prohibit future double-counting of Medicare Hospital Insurance (HI) savings, to ensure that future fiscal outcomes are consistent with the longstanding intent that both Social Security and Medicare HI be operated as self-financing programs.

There is currently an enormously expensive loophole in the budget rules. By law, Social Security and Medicare HI are only permitted to spend when there are positive balances in their respective trust funds. They must constrain benefit spending if trust fund reserves are depleted. Despite this restriction of law, current scorekeeping rules instead assume the law governing these programs will be changed to permit full payment of all scheduled benefits irrespective of trust fund spending authority. This results in a scorekeeping baseline assuming much higher spending than permitted under current law.

Source: An Overdue Budget Reform: Prohibit Double-Counting of Medicare Savings | Economics21

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