Automatic Solvency Adjustments in Medicare: Conceptual Considerations

James Capretta
Additional contact information
James Capretta: American Enterprise Institute

AEI Economic Perspectives, 2024

Abstract: Embedding automatic and gradual budgetary adjustments in Social Security and Medicare would substantially lessen the risk of runaway federal debt. Implementing these adjustments would be more complex in Medicare than in Social Security. The first step should be to inject more discipline into Medicare by modifying its Supplementary Medical Insurance trust fund. A second step should be to eliminate fragmentation in the insurance benefit. With these changes, Congress could balance automatic adjustments between revenue and spending parameters and manage spending by imposing more restraint on payments to service providers and higher costs for beneficiaries. Ensuring permanent Medicare trust fund stability would be consistent with the program's original design and would lessen the frequency and intensity of divisive solvency-restoration debates.

Keywords: AEI Economic Perspectives; Medicare; Social Security; Federal Budget; Supplementary Medical Insurance Fund (search for similar items in EconPapers)
JEL-codes: A (search for similar items in EconPapers)
Date: 2024
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.aei.org/wp-content/uploads/2024/09/Eco ... -Medicare.pdf?x85095

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aei:journl:y:2024:id:1008619151

Access Statistics for this article

More articles in AEI Economic Perspectives from American Enterprise Institute Contact information at EDIRC.
Bibliographic data for series maintained by Dave Adams, CIO ().