The Medicare Trigger

Because of concerns over the potential for growth in general revenue spending for Medicare over time, the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA; P.L. Specifically, Section 801 of the MMA requires the Medicare trustees, beginning with their 2005 report, to examine and make a determination each year of whether general revenue funding is expected to exceed 45% of Medicare outlays for the current fiscal year or any of the following six fiscal years. If such a warning is issued, the MMA (Sections 802-804) specifies certain requirements and procedures for the President and Congress to follow related to the introduction and consideration of legislation designed to respond to the warning. A Medicare funding warning is triggered when two consecutive Medicare trustees' reports contain projections that general revenue Medicare funding will exceed 45% of total Medicare outlays at some point during the next seven years (this includes the current and six subsequent fiscal years). Issuance of Funding Warnings

The Medicare trustees first made a determination of excess general revenue Medicare funding in their 2006 report and did so in each report through 2013. Therefore, the trustees issued a determination of excess general revenue Medicare funding. Because such a determination was made in two consecutive years, a funding warning has been triggered and a legislative response by the President will be required subsequent to the release of his FY2020 budget (in 2019). Although the precise contents of the proposal remain within the President's discretion, Section 802 of the MMA requires that the proposal be submitted within 15 days of submitting a budget for the succeeding year. The requirement that the President submit proposed legislation in response to a funding warning does not apply, however, if, "during the year in which the warning is made," Congress enacts legislation to eliminate excess general revenue Medicare funding for the seven-fiscal year reporting period, as certified by the Medicare trustees within 30 days of the legislation's enactment. Since the Medicare trustees did not issue funding warnings in their 2014, 2015, 2016, or 2017 reports, the President was not required to submit related legislation subsequent to the submission of his FY2015 through FY2019 budgets. However, as the Medicare trustees issued a funding warning in their 2018 report, the MMA provides that the President will be required to submit a responsive legislative proposal after the release of his FY2020 budget. Proponents of the 45% threshold measurement believe that it can serve as an effective early warning system of the impact of Medicare spending on the federal budget, and that it forces fiscal responsibility. Opponents of the measure suggest that it does not adequately recognize a shift toward the provision of more services on an outpatient basis (thus shifting spending from Medicare Part A to Part B) or the impact of the Part D program on general revenue increases, and that other measures such as Medicare spending as a portion of total federal spending, are better ways to determine the health of the Medicare program.
The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA; P.L. 108-173) requires the Medicare Board of Trustees to provide in its annual reports an expanded analysis of Medicare expenditures and revenues (Section 801 of the MMA). If the Medicare trustees determine that general revenue funding for Medicare is expected to exceed 45% of Medicare outlays for the current fiscal year or any of the next six fiscal years, a determination of excess general revenue Medicare funding is made. If the determination is issued for two consecutive years, a funding warning is issued which triggers certain presidential and congressional actions (Sections 802-804 of the MMA). Specifically, in the event of a funding warning, the President would be required to submit to Congress proposed legislation to respond to the funding warning within 15 days of submitting a budget for the succeeding year, and Congress would then be required to consider that legislation on an expedited basis.
Because a determination of excess general revenue Medicare funding was issued in both the 2006 and the 2007 Medicare trustees' reports, the President was required to submit a legislative proposal to Congress within 15 days of submitting his FY2009 budget (in 2008) that would lower the ratio to the 45% level. Similarly, each of the subsequent annual reports of the Boards of Trustees through 2013 included an estimate that general revenue funding would exceed 45% at some point during the current or six subsequent fiscal years, thus triggering a response from the President and Congress. President George W. Bush submitted such a proposal in 2008, but no related legislation has been enacted.
In each of their 2014 through 2016 reports, the Medicare trustees projected that general revenue Medicare funding would not exceed 45% of total Medicare outlays within seven fiscal years. Therefore, the Medicare trustees did not issue funding warnings in those years, and the President was not required to submit related legislative proposals subsequent to the release of the FY2015 through FY2019 budgets. However, in both their 2017 and 2018 reports, the Medicare trustees issued a determination of projected excess general revenue Medicare funding. Because such a determination was made in two consecutive years, a funding warning has been triggered and the MMA provides that the President will be required to submit a responsive legislative proposal after the release of his FY2020 budget (in 2019).
The Medicare funding warning focuses attention on the impact of program spending on the federal budget, and it provides one measure of the financial health of the program. However, some options for reducing general revenue spending below the 45% level would have a greater impact than others. Proponents of the trigger maintain that it forces fiscal responsibility, whereas critics of the trigger suggest that other measures of Medicare spending, such as total Medicare spending as a portion of federal spending, would be more useful indicators.