“It is true that, as of right now, Medicare is projected to be unable to pay all of its bills as early as 2028. Without congressional action, a stronger economy, or more likely, both, the government could end up without enough money to cover everything it promises enrollees within five years.
That would be unprecedented and would likely provoke a political crisis. But it is not quite the same thing as Medicare going bankrupt and ceasing to exist entirely. Alarm bells have sounded about Medicare’s trust fund for decades, with the exact date of when it would run out of money moving forward and back. But, eventually, Congress will need to act.
To understand the program’s financial situation, start with how Medicare is structured. Medicare is broken down into several different parts. Part A covers hospital care, stays at skilled-nursing facilities, and home health care. Part B pays for outpatient physician care. Part D is the prescription drug benefit, which is administered by private insurance plans. Most Medicare beneficiaries — anyone over age 65 — get their insurance directly through the government. But almost half are now insured through Medicare Advantage (also known as Part C) in which patients sign up for a private plan, paid for largely by the federal government, which provides a comprehensive suite of benefits. (Those plans are also more expensive to the government and their growing enrollment is contributing to the solvency problem”
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“Different parts of Medicare are funded in different ways, but when we’re talking about a Medicare funding crisis, we’re talking about the benefits paid by Part A: hospital services. Hospital bills for Medicare enrollees are funded almost entirely through the program’s dedicated payroll taxes. If those benefits cost more than the government receives in Medicare payroll taxes in a given year, as can happen in an economic downturn, the difference comes out of a trust fund earmarked specifically for Part A. The Medicare trustees, who issue annual reports on the program’s finances, project that Medicare spending will begin outpacing revenue again in 2024, requiring the program to dip into the trust fund. The trust fund is projected to be fully depleted by 2028 without further policy changes.”
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“Part B and Part D, however, are not facing the same financial crunch. They are funded primarily by general tax revenue, instead of an earmarked payroll tax, and premiums paid by beneficiaries. Their trust funds are projected to be sufficient for the foreseeable future.”
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“Medicare Advantage plans receive funding based on the type of service provided to their customer, which means money for hospital care comes from Part A. Annual Part A payments to Medicare Advantage plans is expected to increase from about $176 billion in 2022 to $336 billion by 2030.
Separate from the new budget proposal, the White House is attempting to rein in the payments to Medicare Advantage plans (from an 8 percent increase last year to a proposed 1 percent increase in the coming year). Republicans and the health insurance industry have slammed that proposal as a cut to Medicare, an example of how it can be politically difficult to get Medicare spending under control.
Biden’s budget will likely jumpstart a new debate about Medicare solvency. But it’s only a beginning.
Congress has passed provisions to reduce Medicare spending in recent years, such as the Inflation Reduction Act’s plan for the program to negotiate some prescription drug prices. But lawmakers have also acted to avert any cuts to how much the program pays doctors, hospitals, and other medical providers.
Both tax increases and any spending reductions can be a tough sell in Congress. So can increasing the eligibility age, an oft-floated idea that still amounts to cutting benefits for seniors.
Biden is going with tax hikes in his budget plan. But it’s not yet clear if lawmakers are really willing to act on his or any proposal to improve Medicare’s finances.
They still have five years before the Part A trust fund will run out, according to the latest available projections. The Medicare trustees urged Congress to act soon to avert the crisis, in order to minimize the risks for patients and providers. But unfortunately, lawmakers have a habit of waiting until the last minute to act.”
“”More money can help schools succeed, but not if they fritter those extra resources in unproductive ways,” Jay Greene, a senior research fellow at the Heritage Foundation, told Reason. “There is no one formula for how to spend money correctly in schools. But there are many common ways that schools blow resources. Wasteful schools tend to hire more non-instructional staff while raising the pay and benefit costs for all staff regardless of their contribution to student outcomes. If you fully disconnect compensation from performance, you can raise salaries and benefits endlessly without anyone learning more.”
While making good spending choices can help close some of the gap between affluent and non-affluent schools, it’s worth noting that student poverty has a large effect on school performance.”
“A three-judge panel on the 5th Circuit Federal Court of Appeals ruled this week that the CFPB’s structure is unconstitutional because Congress has no control over the agency’s budget, which is funded entirely by the Federal Reserve. Under the terms of Dodd-Frank, the CFPB is entitled to receive a budget totaling up to 12 percent of the Federal Reserve’s annual operating expenses, and the Federal Reserve is not allowed to refuse the CFPB’s requests for funding.
“Congress’s decision to abdicate its appropriations power under the Constitution, i.e., to cede its power of the purse to the Bureau, violates the Constitution’s structural separation of powers,” Judge Cory Wilson wrote in this week’s ruling.”
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“”Congress did not merely cede direct control over the Bureau’s budget by insulating it from annual or other time-limited appropriations. It also ceded indirect control by providing that the Bureau’s self-determined funding be drawn from a source that is itself outside the appropriations process—a double insulation from Congress’s purse strings that is ‘unprecedented’ across the government,” Wilson wrote in the court’s ruling. “Even among self-funded agencies, the Bureau is unique. The Bureau’s perpetual self-directed, double-insulated funding structure goes a significant step further than that enjoyed by the other agencies on offer.””
“As state legislators kicked off their 2022 sessions this spring and started planning new budgets, many found that their tax coffers were overflowing. What lawmakers do with that extra money could have long-range consequences.
The excess revenue resulted from a convergence of two windfalls. State tax collections rose sharply in 2021 as the pandemic waned, businesses fully reopened, and consumers started spending again. And the federal government showered states with more than $360 billion as part of the $1.9 trillion American Rescue Plan, passed in March 2021. The passage of President Joe Biden’s $1 trillion infrastructure bill means even more federal taxpayer money for state treasuries in the near future.
All told, state revenues (including federal funds) increased by more than 12 percent in 2021, according to data from the Pew Charitable Trusts. Thirty-two states reported higher than expected revenue in 2021, according to the National Association of State Budget Officers.
As a result, many states now have significant year-over-year budget surpluses for the current year. California leads the way with a $31 billion surplus—an amount larger than many states’ entire annual budgets. Florida ($11.2 billion surplus), Maryland ($4.6 billion), Minnesota ($7.7 billion), and Virginia ($2.6 billion) also have large cash reserves. But state lawmakers should be careful about letting the extra dough burn a hole in their pockets.
“It’s understandable that there is all this pent-up demand for different kinds of new programs or tax cuts,” says Josh Goodman, a senior officer with Pew’s state fiscal health initiative. The impulse to use surpluses for pet projects, Goodman says, ignores data that suggest many states are running long-term structural deficits—largely due to pension obligations and health care costs in programs like Medicaid. “The question is not just what’s the budget situation this year,” Goodman says, “but what is the budget -situation going to be five or 10 years down the road.””
“The roughly $10 billion in pandemic aid the Senate is preparing to vote on after a weekslong impasse will keep the nation’s testing, treatment and vaccination programs afloat for only a couple months, lawmakers, Biden administration officials and public health experts warn.”
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“This round of funding — if it can pass the House and Senate — would help restart key Covid-19 programs that recently ran out of resources, including the development of future variant-specific vaccines and federal government purchases of drugs for people at risk of hospitalization.
But the package was whittled down from more than $30 billion federal officials originally argued was needed to $22.5 billion the White House pitched to Capitol Hill last month to $15.6 billion congressional leaders tried to attach to the 2022 spending bill.
Now, $10 billion is on the table and the money for the global vaccination effort and for testing, treating and vaccinating the uninsured was dropped, all but guaranteeing the Biden administration will shortly need Congress to do this all over again.”
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“Public health leaders warn that these short-term bursts of cash are creating gaps in preparedness, leaving millions vulnerable to a new Covid surge.”
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“with no global money in the current deal, policymakers fear the disruption to the U.S.’ pandemic work overseas will continue indefinitely.
“Doing nothing to slow the global spread of COVID-19 is foolhardy,” Senate Appropriations Chair Patrick Leahy (D-Vt.) warned Monday. “As the virus continues to mutate and wreak havoc overseas, more Americans will become sick and die.”
For months, officials at the U.S. Agency for International Development have warned lawmakers that they would soon run out of money to help facilitate vaccinations in low- and middle-income countries, and advocated for at least $19 billion for the global Covid fight.”
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“On the domestic front, the funding delays have forced the federal government to halt purchases of enough additional booster doses for all Americans and slash the purchase and distribution of monoclonal antibody treatments and antiviral pills for high-risk Covid patients. It has also disrupted research into new treatments and cut off reimbursements to doctors around the country for testing, treating, and — as of Tuesday — vaccinating the uninsured. Even if Congress manages to approve the funding this week, public health experts say, there’s a good chance all of these threats will reemerge in just a few months, damaging the stability and continuity of their fight against the virus.”
“the latest CR means that government agencies are still operating on a budget from December 2020. Not only is that budget insufficient to meet the funding needs of major portions of the government, such as the Defense and Transportation departments, but the use of the CR prevents the implementation of new programs from legislation Congress has already passed, like the infrastructure bill. Without individual appropriations bills or an omnibus bill that accounts for all of the programs and funding needed for different agencies, the government can’t get started on a number of major projects despite the clear need for infrastructure upgrades and bipartisan support for the legislation.”
“Congress’s dependence on CRs is due to lawmakers’ inability to agree on full-year appropriations bills.
Congress’s actual deadline for passing appropriations legislation is at the end of September each year. Because bills from the previous year expire at that time, lawmakers need to approve a new set of 12 appropriations bills to fund federal agencies and make sure the government doesn’t run out of money. (If the government runs out of money and shuts down, agencies are forced to furlough employees and reduce their services.)
Had these bills passed on time, all spending would have been approved last fall. Instead, because Democrats and Republicans couldn’t come to an agreement, they passed a short-term spending bill that gave them a new deadline in December. When they couldn’t reach an agreement then, they passed another short-term spending bill that postponed the deadline to February 18. And because of ongoing conflicts, they’re planning to pass one more short-term spending bill to give them until mid-March.
Whether lawmakers procrastinate again is an open question.”
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“Because Democrats control 50 Senate seats, but need 60 votes to pass the funding bills, members of the minority have leverage over what they’d like to see included.”
“Democrats hold power in the House, Senate and White House for the first time in more than a decade, yet the high-profile defense bill got more GOP votes than from Biden’s own party. As progressive lawmakers made their dissatisfaction with the bill’s high price tag clear, centrist Democrats knew they needed Republican support to pass the House and Senate.”
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“Bipartisan provisions requiring women to register for the draft, cracking down on Saudi Arabia and imposing sanctions on Russia were nixed; legislation repealing outdated Iraq war authorizations fell by the wayside; reforms to the military justice system and efforts to combat extremism in the ranks were pared back; and a proposal to give Washington, D.C., control of its National Guard was dropped.”
“Millions of veterans are self-medicating their war-caused ailments with marijuana, and they are frustrated the VA continues to dismiss the drug’s possible benefits. The VA will not expand the piecemeal cannabis research it is undertaking, despite recent bipartisan calls from Congress, doctors and veterans. And without that research, the VA continues to deny cannabis recommendations to veterans in 36 states that allow medical marijuana.”
“The federal government sent around $190 billion in aid to public schools across the nation during the COVID-19 pandemic. That is a lot of money by any standards, but in terms of federal spending on primary education, it is a shockingly large amount: as Reason’s Matt Welch explained when surveying the Biden administration’s weak moves toward promoting public school reopening back in February, that’s more than four times as much as the federal government tended to push toward K-12 education a year in pre-COVID times.
Is the money being diligently used for its intended purpose? Of course not. A survey by ProPublica found, when examining some of the “provisional annual reports…by state education agencies” for about $3 billion worth of the aid from March to September of 2020, that “just over half of the $3 billion in aid was categorized as ‘other,’ providing no insight into how the funds were allocated.”
Over the last school year, 15 states constituting around a quarter of the total U.S. population didn’t even manage to achieve 50 percent effective in-person education, the alleged purpose of all that federal COVID money.”
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“”The law places few restrictions on how districts can spend the federal aid, as long as the investments are loosely connected to the effects of the pandemic,” ProPublica explains, while noting that various districts, as reported by the Associated Press, are diverting the cash to athletics. The schools are supposed to spend all the money by 2024. The Associated Press reports that although schools “are required to tell states how they’re spending the money…some schools are using local funding for sports projects and then replacing it with the federal relief—a maneuver that skirts reporting requirements.””