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CBO
TESTIMONY
 
Statement of
Paul N. Van de Water
Assistant Director
for Budget Analysis
Congressional Budget Office
 
on
The Financial Status of the Medicare Program
 
before the
Subcommittee on Health
Committee on Ways and Means
U.S. House of Representatives
 
April 30,1996
 
NOTICE

This statement is not available for public release until it is delivered at 2:00 p.m. (EDT) on Tuesday, April 30,1996.
 

Mr. Chairman and Members of the Subcommittee, it is my pleasure to be here today to discuss the financial status of the Medicare program, particularly the Hospital Insurance (HI) trust fund.

Continuing growth in the cost of providing Medicare coverage to each beneficiary, coupled with a steady increase in the number of beneficiaries, is eroding the financial status of the program. Spending for Hospital Insurance and Supplementary Medical Insurance (SMI) combined has increased from 0.8 percent of gross domestic product (GDP) in 1975 to 2.5 percent in 1995. The Congressional Budget Office (CBO) projects that if current law is not changed, Medicare spending will increase to 3.8 percent of GDP by 2006. Program revenues, however, are not increasing nearly as rapidly. If left unchecked, those trends will create a problem of major proportions when the baby-boom generation begins to reach retirement age in 2010.

This document is available in its entirety in PDF.