Economic Report President

Box 4-5.—Medicare ReformThe Medicare program, like Social Security, reflects the Nation’scommitment to provide for the needs of its older members, and tosupport disabled Americans of all ages. Reforming Medicare toprotect its financial soundness and ensure that it provides highqualitycare for its beneficiaries has been one of the Administration’stop priorities. The President worked to include importantMedicare provisions in the Balanced Budget Act of 1997, whichpaved the way for an increasingly broad array of innovative healthinsurance choices for beneficiaries and shored up the Medicaretrust fund. The President has taken steps to enroll more lowerincome seniors in supplemental benefit programs that providefinancial assistance in paying Medicare premiums and otherhealth care costs not covered by Medicare. The President has alsodeveloped initiatives to provide new preventive care benefits, toassist beneficiaries whose managed care plans have left theprogram, and to reduce Medicare fraud.Even with these reforms, the aging of the population and thecontinuing development of new medical treatments will lead tomounting cost pressures for the Medicare program in the yearsahead. The President has proposed to reserve 15 percent of theprojected Federal budget surpluses over the next 15 years for theMedicare trust fund, which would extend the program’s solvencyfrom 2008 to 2020. In addition, with the President’s encouragement,the National Bipartisan Commission on the Future of Medicare wasformed to consider reforms to address the difficult long-term problemsfacing the program. The Commission’s report, due in March1999, will be an important next step toward the Administration’sgoal of developing a bipartisan agreement that will preserve andstrengthen Medicare for all Americans in the 21st century.The rate was slightly higher, at 3.2 percent, for workers 65 and older.Older workers have historically had lower unemployment rates thanyounger workers, and these data show that the current employmentsituation for older workers is strong.In addition to having lower unemployment rates, older workers areless likely to be displaced (that is, to have lost their job because of aplant closing, insufficient or slack work, abolition of their position orshift, or some other similar reason) than are workers in their 20s and30s. This has been true in every year since national data on displacementfirst became available in 1984. (See Chapter 3 for a general discussionof displaced workers.) According to the latest survey, conductedin 1998, the displacement rate (the ratio of workers displaced anytimein the 3 years prior to the survey to total employment at the time of the150