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- Written by: Dennis W. Jansen, Texas A&M University and Andrew Rettenmaier, Texas A&M University
President Joe Biden’s 2024 proposed budget includes plans to shore up the finances of Medicare, the federal health insurance program that covers Americans who are 65 and up and some younger people with disabilities.
His administration aims to increase from 3.8% to 5% an existing Medicare tax that’s collected on the labor and investment earnings of Americans who make more than US$400,000 annually. It also aims to reap some savings from having the government negotiate prices on more prescription drugs.
The White House projects that these changes would generate an additional $650 billion in revenue over a decade. Some independent experts concur.
As economists who have long researched the Medicare and Social Security programs, we believe the president’s proposal is an important first step in opening the necessary debate on strengthening Medicare’s finances.
Part A’s precarious funding
Medicare consumes more than 15% of the federal budget. The program cost $975 billion in 2022, out of the government’s $6.5 trillion in total federal spending.
As anyone who has enrolled in it can tell you, the program itself is rather complicated. It’s divided into three parts, known as A, B and D, each of which relies on revenue from a different mix of sources.
Medicare Part A covers care delivered at hospitals and nursing homes, as well as home health care. Part B pays for doctor’s visits and outpatient procedures, and Part D pays for prescription drugs. There’s also Part C, a private insurance option, known as Medicare Advantage. However, its costs are included in the accounting for Parts A and B.
Part A is primarily funded by a 1.45% Medicare payroll tax on both employees and employers. When that tax and the program’s other tax revenues don’t raise enough money to cover Part A’s costs, the program dips into the Medicare Hospital Insurance trust fund to make up the difference. The trust fund, amassed from past surplus payroll taxes, currently stands at around $143 billion.
Without spending cuts, funding increases or a combination of the two, the Medicare program’s trustees have predicted in their annual report that the Medicare trust fund will be exhausted by 2028. The trustees are the secretaries of the Treasury, Labor and Health and Human Services departments, plus the Social Security commissioner. There can be up to two additional trustees, but those seats are vacant.
Medicare’s expenses are rising rapidly with the retirement of baby boomers, the large generation of Americans born between 1946 and 1964, and rising health care costs.
Should the trust fund be emptied out, the trustees predict that hospital benefits would have to be cut by 10%. But those cuts are widely considered to be politically unacceptable, as illustrated by statements from Biden and his predecessor, former President Donald Trump.
In addition to proposing an increase in the tax levied on the investment earnings of high-income Americans, Biden also proposes that these revenues be fully dedicated to the trust fund. Currently the government treats that money as general revenue that can be used for any government program.
2 very different scenarios
Unlike Medicare Part A, Parts B and D are funded largely by general federal revenue and by premiums paid by retirees.
Because the government is allowed to use general revenue to pay for them, the funding of Parts B and D isn’t jeopardized by the depletion of their trust fund – no matter how fast those costs rise.
Even without Biden’s proposed changes, official Medicare spending projections rise rapidly through the mid-2030s and then plateau as a percentage of gross domestic product.
However, those projections are based on a presumption that payments to hospitals are constrained as specified in the Affordable Care Act and that other spending constraints on physician payments are realized.
Unfortunately, history provides little assurance that lawmakers will maintain all of these requirements to restrain future payments to health care providers.
We say this because of what happened after 1997, when Congress approved the sustainable growth rate system, which was intended to limit the annual increase in cost per Medicare beneficiary to the rate of economic growth. Starting in 2002, Congress passed legislation year after year to override it – and only stopped doing that once it did away with the system altogether in 2015.
Reflecting this uncertainty, the annual trustees report features an alternative projection that is arguably more credible and more scary. It indicates that Medicare costs will grow much faster than the economy starting in 2036.
Competing demands
The Social Security program, a national pension program that primarily supports older Americans, faces similar funding shortfalls.
Its trustees anticipate that the Social Security trust fund will be depleted by 2035 without changes in funding, promised benefits – or both. In that event, Social Security benefits may have to fall by about 20% from anticipated levels.
Medicare and Social Security are the nation’s largest entitlement programs. Almost all Americans, if they live long enough, will eventually be eligible to obtain these benefits – regardless of their income or wealth.
While Americans do not yet agree on how to put these programs on a steadier fiscal footing, the math is clear.
Our elected representatives cannot avoid making hard decisions that involve increasing taxes, reducing benefits or both.
Dennis W. Jansen, Professor of Economics and Director of the Private Enterprise Research Center, Texas A&M University and Andrew Rettenmaier, Executive Associate Director of the Private Enterprise Research Center, Texas A&M University
This article is republished from The Conversation under a Creative Commons license. Read the original article.
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- Written by: LAKE COUNTY NEWS REPORTS
LAKE COUNTY, Calif. — On Sunday, Rep. Mike Thompson (CA-04) named his selection for the 2023 Lake County Woman of the Year.
Thompson has chosen for the honor Sherry Treppa, the tribal chair of the Habematolel Pomo, based in Upper Lake.
Every year, Thompson selects inspiring women from California’s Fourth District to recognize their contributions and efforts over the last year.
“Sherry Treppa has dedicated her life to serving and protecting the Pomo tribe in California,” said Thompson. “As the chairperson for the Habematolel Pomo of Upper Lake, she continues to focus on restoring the Pomo tribe land, while aiming to achieve economic self-sufficiency and preserving their culture and right of sovereignty.”
Thompson added, “Through Sherry’s tireless advocacy, she has been able to represent Native Americans and her tribe, while pursuing economic stability and keeping Native American and the Pomo tribe culture alive for many more generations to come.”
The Woman of the Year Recognition Ceremony was started in honor of Women’s History Month to recognize the service of women in our community.
A complete list of 2023 winners include:
• Sherry Treppa — Lake County.
• Fran Lemos — Napa County.
• Alexis Koefoed — Solano County.
• Jasmine Palmer — Sonoma County.
• Brooke Ingleheart Ross — Sonoma County.
• Mary Kimball — Yolo County.
Thompson represents California’s Fourth Congressional District, which includes all or part of Lake, Napa, Solano, Sonoma and Yolo counties.
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- Written by: Elizabeth Larson
The Rural Communities Housing Development Corp., or RCHDC, will hold the meeting from 5 to 6:30 p.m. Wednesday, March 22, at the Nice Event Center, 2817 E. Highway 20.
RCHDC, based in Ukiah, plans to build a 40-unit affordable housing complex on a 3.3-acre parcel at 6853 Collier Ave. in Nice.
There will be one unit for an on-site manager, with half of the other 39 units to set aside for Lake County Behavioral Health clients who meet the definition of mental disorder — which includes, under state code, bipolar, post-traumatic stress disorder, schizophrenia, major affective disorders or other severely disabling mental disorders — as well as substance use disorder or those at risk of homelessness.
The remaining units will be split between Redwood Coast Regional Center clients and low income or very low income households.
The Board of Supervisors, as the Lake County Housing Commission, took key votes in January to give financial approvals to clear the way for the project.
The board also took up a special item at its March 7 meeting at the request of Behavioral Health Services staff in order to approve additional loan documents for the project.
The process involving the project has been confusing, and the former county planning department head made a determination to waive state environmental quality act rules that would have ensured more public input.
RCHDC told Lake County News last year that it would hold more community outreach over the summer, but that didn’t happen.
The meeting this week — although very late in the process — is meant to offer the community the chance to find out more about the project.
The flier for the meeting has not been widely publicized and was reportedly only sent to neighbors within half a mile of the project site. It also has not been posted on RCHDC’s website or Facebook page.
Email Elizabeth Larson at
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- Written by: Elizabeth Larson
The board will meet beginning at 9 a.m. Tuesday, March 21, in the board chambers on the first floor of the Lake County Courthouse, 255 N. Forbes St., Lakeport.
The meeting can be watched live on Channel 8, online at https://countyoflake.legistar.com/Calendar.aspx and on the county’s Facebook page. Accompanying board documents, the agenda and archived board meeting videos also are available at that link.
To participate in real-time, join the Zoom meeting by clicking this link.
The meeting ID is 924 7782 7326, pass code 944401. The meeting also can be accessed via one tap mobile at +16694449171,,92477827326#,,,,*944401#.
All interested members of the public that do not have internet access or a Mediacom cable subscription are encouraged to call 669-900-6833, and enter the Zoom meeting ID and pass code information above.
In an item timed for 10 a.m., the board will hear a presentation from Jose Varela regarding the provision of public defender services and the structuring and organization of a public defender services program.
During a February discussion on the indigent defense contract, the County Counsel’s Office recommended that the board consider hiring Varela — the retired chief public defender of Marin County — to ensure the county is providing comprehensive defense services.
In an untimed item, Water Resources staff will discuss with the board the department’s capacity for forming and implementing a fisheries program focused on the Clear Lake hitch, or Chi.
Last month, the board declared an emergency related to the native fish, which in recent years have declined precipitously in numbers.
“The presentation will include anticipated costs, staff, and resources needed to form a program of this nature along with outlining the overall capacity of the Department's ability to do so,” the staff report said.
In an untimed item, the board will consider appointments to the Lake County Recreation Agency Board of Directors.
In other timed items, at 9:07 a.m. the board will present a proclamation commending Library Technician Mickey Price for her efforts to help find housing for an elderly man who was dropped off at the library and at 11:15 a.m. the supervisors will honor retiring County Counsel Anita Grant on her 31 years of service to Lake County.
The full agenda follows.
CONSENT AGENDA
5.1: Approve public defender contract amendment No. 9 between the county of Lake and Lake Indigent Defense LLP for the purpose extending the term of the contract to June 30, 2023, and authorize chair to sign .
5.2: Adopt resolution approving Agreement No. 22-1694-002-SF with the state of California, Department of Food and Agriculture for insect trapping for fiscal year 22-23 in the amount of $48,666.29.
5.3: Adopt proclamation commending Library Technician Mickey Price for going above and beyond and serving the public with compassion and professionalism.
5.4: Adopt proclamation commending County Counsel Anita Grant for her 31 years of service to Lake County.
5.5: Approve Board of Supervisors minutes for Feb. 28, 2023.
5.6: (a) Adopt the Resolution Amending Resolution No. 2022-118 adopting the final budget for Fiscal Year 2022-2023 to increase revenue in the District Attorney's General Fund Budget Unit 2110 and to appropriate the unanticipated revenue and (b) approve the purchase of a 2022 Ford Explorer Hybrid 4x4 and authorize the district attorney to sign a purchase order not to exceed $65,000 to Downtown Ford.
5.7: Approve resolution of intent to conduct a public hearing for the consideration of the vacation of a portion of a roadway known as Robert's Road in the Middletown area.
5.8: Approve out-of-state travel for Emergency Services Assistant Alma Perez to attend the Emergency Management Institute in Maryland from June 11 to 17, 2023.
TIMED ITEMS
6.2, 9:07 a.m.: Presentation of proclamation commending Library Technician Mickey Price for going above and beyond and serving the public with compassion and professionalism.
6.3, 10 a.m.: Presentation by Jose Varela regarding the provision of public defender services and the structuring and organization of a public defender services program.
6.4, 11:15 a.m.: Presentation of proclamation commending County Counsel Anita Grant for her 31 years of service to Lake County.
UNTIMED ITEMS
7.2: Consideration of updated advisory board application.
7.3: Consideration of the following advisory board appointments: Lake County Child Care Council.
7.4: Consideration of update regarding timeline for mandatory advance planning projects and staff resource capacity within the Community Development Department.
7.5: Consideration of presentation and discussion on capacity of Lake County Water Resources Department Development and implementation of a (Clear Lake Hitch) fisheries program.
7.6: Consideration of resolution rescinding Resolutions 92-129 and 2012-98 and re-establishing bylaws of the Lake County Fish & Wildlife Advisory Committee.
7.7: Consideration of Section 20 of the County Policies and Procedures Manual for a facilities capital improvement plan policy.
7.8: Consideration of appointments to the Lake County Recreation Agency Board of Directors.
CLOSED SESSION
8.1: Conference with legal counsel: Existing litigation pursuant to Gov. Code section 54956.9 (d)(1) – Penhall v. Lake County Probation Department, et al. and related Public Employees Relations Board claim.
8.2: Public employee evaluation: Special Districts Administrator Scott Harter.
8.3: Public employee evaluation: Public Works/Water Resources Director Scott De Leon.
8.4: Public employee appointment Pursuant to Gov. Code Section 54957(b)(1): Interviews for Behavioral Health director; appointment of Behavioral Health director.
Email Elizabeth Larson at