The Medicare and Medicaid Improvement Funds: Budgetary History and Projections
CBO describes features of the Medicare and Medicaid improvement funds and how the funds are accounted for in CBO’s baseline and cost estimates.
Summary
In 2008, lawmakers established the Medicare Improvement Fund and the Medicaid Improvement Fund. Since then, more than 30 laws adding or removing resources for the funds have been enacted. Medicare and the federal component of Medicaid are administered by the Centers for Medicare & Medicaid Services (CMS) within the Department of Health and Human Services (HHS). CMS has not spent money from either fund since their establishment.
Medicare is a federal health insurance program for people age 65 or older and for younger people with long-term disabilities or end-stage renal disease. The purpose of the Medicare Improvement Fund is to generally improve the original Medicare program (the parts that provide hospital and medical insurance, commonly known as Parts A and B), in ways that may include adjusting the amounts that Medicare pays to health care providers and suppliers. The fund has $180 million available to spend for services furnished during and after 2022.
Medicaid is a joint federal-state program that covers acute and long-term health care for groups of low-income people, chiefly families with dependent children, elderly people (those age 65 or older), nonelderly people with disabilities, and—at the discretion of individual states—other non- elderly adults whose family income is up to 138 percent of the federal poverty guidelines. The Medicaid Improvement Fund was established to improve management of the Medicaid program in ways that may include oversight of contracts and contractors and evaluation of certain projects. It was expanded in recent years to support computer systems for processing health insurance claims. Currently, the fund has $7 billion available to spend in 2028 and later.
The Congressional Budget Office periodically reviews federal spending on Medicare and Medicaid while preparing the federal budget projections (or baseline) that the agency uses to produce estimates of the budgetary effects of legislation (cost estimates). This Budget Spotlight describes features of the Medicare and Medicaid improvement funds and how the funds are accounted for in CBO’s baseline and cost estimates.