Part B Fund 'Adequately Financed,' Part A Solvency Extended Eight Years Washington The Medicare Trustees in their annual report voiced concern about the rapid increases in long-term care costs to the Supplementary Medical Insurance (Medicare Part B) trust fund and urged Congress to control SMI costs in light of the aging baby-boomer population.

"In an era of growing surpluses, the president has made the difficult decision to call for using these surpluses to improve our nation's fiscal position," said Treasury Secretary Lawrence Summers, managing trustee. "Fiscal discipline has contributed enormously to the current economic expansion. We must continue with fiscal discipline and use the benefits to strengthen Social Security and Medicare."

Although the report said the SMI fund is "adequately financed into the indefinite future," it expressed concern about the program's growth in relation to the economy.

The program grew approximately 5 percent faster than the economy as a whole over the past five years, with outlays increasing 30 percent on a per-beneficiary basis during that time. The report indicated that this trend would continue. In 1999, SMI outlays were less than 1 percent of the gross domestic product. By 2075, they're estimated to grow to nearly 2.4 percent.

The overall SMI trust fund balance dipped $1.4 billion, from $46.2 billion at the close of 1998 to $44.8 billion in 1999. Trustees attributed this decrease to a shorter 1999 fiscal year. Most premium and general fund revenues for January 1999 were received in December 1998, giving 1998 13 months of income while shortening 1999 to 11 months.

In 1999, 32 million aged people and 5 million disabled people enrolled in SMI; 87 percent received services covered under the program.

Also released was the report on the Hospital Insurance (Medicare Part A) trust fund, whose solvency was extended by eight years. The HI fund is now set to go broke in 2023, rather than 2015 as reported last year.

Complete reports for the SMI and HI trust funds can be downloaded at www.hcfa.gov/pubforms/tr/ on the Internet.