On Tuesday, July 12, a Subcommittee of the House Oversight and Government Reform Committee convened a hearing on the so-called “Medicare Trigger.” I was asked to testify on a panel that included Chuck Blahous, Public Trustee for Social Security and Medicare, Joe Antos of the American Enterprise Institute, and Paul Van de Water of the Center on Budget and Policy Priorities. We followed Jonathan Blum of the Centers for Medicare and Medicaid Services, who testified on behalf of the administration.
The Medicare trigger was enacted in 2003 as part of the Medicare prescription drug legislation. It requires the Medicare trustees to monitor the financing of the program and issue warnings whenever dedicated revenue sources for the program (mainly payroll taxes and premiums) fall below 55 percent of total Medicare spending — or, to put it another way, whenever non-dedicated revenue sources cover more than 45 percent of the program’s total annual costs. This trigger was intended to help Congress keep track of the burden that Medicare spending is placing on general taxpayer funds. If the trustees issue a warning two years in a row, then the president is supposed to submit legislation to correct the breach. In 2011, the trustees issued a warning but no legislation was submitted by the president, which is the main reason the hearing was held.