The Balanced Budget Delivers a Budget That
Strengthens and Preserves Medicare

The Budget Agreement preserves and strengthens the Medicare program, saving $115 billion over five years and extending the life of the Medicare Trust Fund for at least ten years. It modernizes Medicare by including new market-oriented reforms that have proved successful in the private sector plus $4 billion in new preventive benefits. As this agreement strengthens and preserves the Medicare program, it also creates a Medicare Commission to examine the long-term needs of the program so that Medicare will be prepared for the retirement of the baby boomers.

SAVES APPROXIMATELY $115 BILLION OVER FIVE YEARS. Includes about $115 billion in savings over five years and between $400-$450 billion over ten years.

EXTENDS THE LIFE OF THE MEDICARE TRUST FUND FOR AT LEAST TEN YEARS. This agreement will keep Medicare solvent until at least 2007.


(1) Empowering the Secretary of Health and Human Services to implement competitive market mechanisms;

(2) Opening up new options that offer more choice among competing health plans and have proven effective in the private sector, including Preferred Provider Organizations (PPOs) and Provider Sponsored Organizations (PSOs);

(3) Providing Americans with meaningful choices by reforming annual Medigap enrollment; and

(4) Building on Medicare's success in controlling hospital costs, restructuring the payment systems for home health, agencies, skilled nursing facilities and hospital outpatient departments so that rates are set in advance through a prospective payment system.

INCLUDES $4 BILLION OVER FIVE YEARS FOR NEW PREVENTIVE BENEFITS. Expanding coverage for mammograms and colorectal screening and improving self-management of diseases like diabetes.

ENSURES NEW PREMIUM PROTECTIONS FOR LOW-INCOME MEDICARE BENEFICIARIES. The budget agreement invests $1.5 billion over five years to pay the premiums for beneficiaries up to 135 percent of poverty. Beneficiaries over 135 percent of poverty to as high as 175 percent of poverty will get assistance as well.

TAKES STEPS TO ENSURE THAT VULNERABLE HOSPITALS ARE PROTECTED. The Agreement reduces the Medicare Disproportionate Share Hospitals cut from $2.4 billion in the Senate-passed bill to $600 million over five years.

ESTABLISHES A MEDICARE COMMISSION. The agreement creates a 17-member Medicare Commission which contains eight Democrats and eight Republicans and a Chair who will be selected jointly by the President and the Congressional leadership. The Commission will release a report in 1999 and require an 11 of 17 majority to ensure that its recommendations are bipartisan.

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