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REMARKS BY:	DONNA E. SHALALA, SECRETARY OF HEALTH AND HUMAN SERVICES
PLACE:		2000 Medicare Trustees Meeting, Washington, D.C.
DATE:		March 30, 2000	

What a difference seven years make.

Our record on protecting Medicare is unsurpassed. When I first became Secretary of Health and Human Services in 1993, Medicare was projected to go into default in 1999. But if Medicare were a person instead of a program - this year it would be quoting Mark Twain's famous line: Reports of my death are greatly exaggerated.

My colleagues and I are here to say that Medicare is alive and well - and doing even better than last year when we announced that the trust fund was solvent to 2015.

Today, we're able to reassure the American people that the Medicare Hospital Insurance trust fund - often called Medicare Part A - is solvent to 2023. I want to repeat that: Solvent to 2023. That means in the seven years since this Administration took office, we have extended the life of the trust fund a full 24 years.

That is the longest projection of solvency since 1974.

We have also cut the long range actuarial deficit by more than three-fourths. Finally, let me say a word about the Supplementary Medical Insurance trust fund - commonly referred to Medicare Part B. The SMI trust fund covers physician and nursing services, outpatient hospital services and home health care. Although spending growth has moderated in recent years, this fund - which general revenues and premiums finance - is still showing a rapid run-up in costs over time. That's why our report calls on Congress to get a handle on these costs while we still can. But this is a cautionary note to a report that otherwise contains very good news.

Let me put this news about Medicare in context.

The economic success of this Administration has strengthened Medicare. Our no nonsense management has strengthened Medicare. We've cut waste. We've demanded more accountability. And we've proposed a modernization package that includes using Preferred Provider Organizations, expanding Centers of Excellence, and paying competitive prices for disease management services.

We've also strengthened Medicare through a vigorous campaign against fraud and abuse waged by the Department's Inspector General, the Health Care Financing Administration, the Justice Department, state and local law enforcement officials - and our seniors who work with us as fraud busters. The vast majority of health care providers are honest. But those inclined to cheat take note: In the last four years, we've recovered almost 2 billion dollars through very aggressive enforcement. Convictions for Medicare fraud are up more than 80 percent since 1992. We've actually put in jail some people who've tried to defraud the system. We have fundamentally changed the behavior of the entire health care industry.

We've strengthened Medicare by investing in prevention services - including flu shots, mammograms and prostate screenings. Prevention is still the cheapest and most cost-effective form of health care. Finally, we've strengthened Medicare by implementing reforms in the bipartisan Balanced Budget Act, and by learning important lessons from the private sector.

There is one downside to this year's good news about the Hospital Insurance trust fund. It invites complacency - and complacency is a prescription for disaster. We must - I repeat, must - seize this opportunity to reform Medicare, invest in the long-term health of Social Security, Medicare, and modernize the benefit package by including prescription drugs.

Keep in mind, we already face a demographic time bomb. Americans over 85 are the fastest growing segment of our population, and the number of Americans over 65 is expected to double over the next 30 years. Although we have extended the solvency to 2023, we have to address the largest part of the demographic problem facing Medicare. Baby boomers will continue to retire into the 2030s, and their Medicare costs will grow after that as they age. Remember, in the world of Medicare - 65 is young.

So the time has come to finish what we started.

What we don't need is a plan that puts no money into extending the life of the trust fund and brings back deficit spending. That would once again leave the trust fund in danger of default. We also don't need Congress to use this good news as an excuse to reverse the progress we've made through the Balanced Budget Act. We will, of course, continue to monitor Medicare to ensure that beneficiaries do not lose their access to high quality health care.

Thank you.