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Legislation Department
July 2, 1999

The Congress will be in recess for the July 4th holiday and will return on Monday, July 12. The Weekly Report will resume on July 16.

In an historic development, President Clinton unveiled his plan to modernize and strengthen the Medicare program. The president reaffirmed his commitment to dedicating 15 percent of the federal budget surplus -- now estimated to be $794 billion over 15 years -- to Medicare. This proposal will ensure that the Medicare program is solvent through at least 2027.

The cornerstone of the president's Medicare reform package is the establishment of a new voluntary Medicare "Part D" prescription drug benefit that would be affordable and available to all beneficiaries. The benefit would have no deductible and would pay for half of the beneficiary's drug costs up to $2,000 in 2002 when the benefit starts to $5,000 in 2008 when the benefit is fully phased in. The monthly premium for the benefit would be $24 beginning in 2002 and would rise to $44 per month by 2008.

Washington budgeteers had good news for the nation this week. The Office of Management and Budget (OMB) is projecting that the unified budget surplus (all revenues from taxes and fees, including Social Security) over the next 15 years will be about $5.466 trillion, about $1 trillion more than estimated as recently as last February. For the upcoming fiscal year (FY 2000), OMB is estimating a $142.5 billion surplus, including Social Security, and a $5 billion surplus without Social Security.

President Clinton used the bright budget forecasts to propose that 66 percent of the entire surplus be "locked away" for the Social Security Trust Fund. Sixty-six percent of the projected surplus would mean about $3.067 trillion. The president is also proposing, after 10 years, crediting Social Security with the interest savings gained from paying down the national debt. This would add another $543 billion to the Social Security Trust Fund, about $850 billion more than the president proposed in February. That would mean that Social Security could pay 100 percent of guaranteed benefits for the next 54 years with no changes to the program. The GOP leadership also claims to "lock away" the surplus for Social Security, but they would give the key to the "lock box" to Wall Street to create private investment accounts.

In addition to allocating more money to Social Security, the president proposed reserving additional moneys from the budget surplus to Medicare, Universal Savings Accounts (USAs), defense and domestic programs. The president renewed his commitment to his proposed USAs with a total cost of $540 billion over 15 years. Clinton also endorsed using some of the surplus for "vital national needs" such as maintaining military readiness, veterans, farm, environmental, and health research programs. Clinton called for setting aside $156 billion of the unified budget surplus for children and education including Head Start, Title 1 - Education for the Disadvantaged, after-school programs, class size reduction, the Safe Schools program, Pell Grants, the Maternal and Child Health Block Grant, immunizations, and WIC.

President Clinton also signaled a new willingness to consider a tax cut.

After several days of parliamentary warfare by Democrats, which had stalled action on appropriations bills, Majority Leader Trent Lott (R-MS) agreed to allow a debate on managed care reform legislation on the floor of the Senate. Legislation will be considered from July 12 to July 15.

Although the Republican strategy is not yet clear, it is assumed that the underlying bill to be debated will be the Republican leadership bill (S. 326). This deeply flawed bill would then be open for amendment by both Republicans and Democrats. Democrats plan to offer a series of amendments which mirror the language of the Patients’ Bill of Rights (S. 6). One of the planned amendments will include whistleblower protection for health care professionals. Another amendment will address the narrow scope of S. 326 which fails to extend patient protections to state and local government employees.