I believe that if we take these actions today, we will ensure that Medicare is there for the today's seniors, for Baby Boomers, and for generations to come.

President Bill Clinton
February 3, 1999

Today, President Clinton addresses the American Association of Retired Persons (AARP) where he will emphasize the need to dedicate 15 percent of the budget surplus to secure the Medicare Trust Fund until 2020. Under the President's proposal, securing Medicare will be part of a broader effort to strengthen and reform the program.

Reserving Part Of The Budget Surplus To Shore Up The Medicare Trust Fund. Medicare provides health care assistance for 39 million older Americans and people with disabilities. As baby boomers retire, the strain on the program will become even greater. Improving competition, efficiency, and traditional savings alone cannot secure Medicare -- we would have to reduce Medicare growth to 2.8 percent, 60 percent below projected private sector growth, to ensure Medicare's solvency until 2020, but by doing so, we would reduce the value of spending per Medicare beneficiary. Virtually every independent health analyst agrees that Medicare cannot be significantly strengthened without adding outside financial support, such as a portion of the budget surplus.

Strengthening Medicare For The 21st Century. President Clinton is committed to strengthening Medicare and ensuring its solvency through at least 2020 as part of a broad effort to reform the program. In today's address, the President will outline four principles by which he will evaluate any Medicare reform proposal. The President believes that any broad-based reforms should:

• Dedicate A Part Of The Budget Surplus To Secure Medicare Until 2020. The President is proposing to use 15 percent of the projected surpluses over the next 15 years to secure the Medicare Trust Fund until 2020 as part of broader reforms to further strengthen the program;

• Modernize Medicare And Make It More Competitive. Medicare should adopt the best management, payment, clinical, and competitive practices used by the private sector to help maintain high-quality services and keep spending growth in line with private sector spending. In addition, strong and effective federal administration of Medicare should be assured;

• Guarantee A Defined Set Of Benefits Without Excessive New Costs To Beneficiaries. Beneficiaries should still be entitled to an adequate set of health benefits. A modernized, well-defined benefits package is needed to assure that health plans compete on cost and quality rather than price. Reforms should also guarantee that current low-income protections are maintained or strengthened, that any new cost burden is not excessive and that beneficiaries have access to a viable, traditional Medicare program;

• Use Savings From Reform To Help Fund A Prescription Drug Benefit. The President believes that additional savings from making Medicare more efficient should be used to help finance a long-overdue prescription drug benefit. Prescription drugs have become an essential part of treatments and cures, and are expected to play an even greater role in health care in the next century. Unfortunately, millions of Medicare beneficiaries have little or no coverage for their medications, limiting their access to needed treatments. Over half of beneficiaries pay more than $500 a month for prescription drugs and one in ten pay more than $2,000 a month.

Meeting The Challenge Of The Senior Boom. The President's plan to stabilize and secure Medicare builds on his commitment to use this period or prosperity to strengthen our economy for the 21st Century:

• The President has proposed, and members of Congress from both parties have agreed, to reserve 62 percent of future budget surpluses to help ensure the solvency of Social Security until 2055. The President wants to work on a bipartisan basis to extend the life of Social Security 75 years;
• President Clinton is proposing that we use 12 percent of the surplus -- more than $500 billion, to give tax credits to American workers to help them save and invest from their first day on the job. These new Universal Savings Accounts -- USA Accounts, will give Americans a choice as to where they invest, and they will receive tax credits to match a portion of their savings.