As noted previously, SMI premiums and general revenue income are reestablished annually to match expected program costs for the following year. Thus, the program will automatically be in financial balance, regardless of future program cost trends. The second difference is the relative level of trust fund assets. Since financing is reset frequently, a lower level of assets can suffice for contingency reserve purposes. The primary concern for SMI is the rapid rate of growth in benefits.
Similar growth is projected for the short-range future.
Although the Balanced Budget Act contained a number of provisions designed to reduce the rate of growth in SMI expenditures, their impact is more than offset by other factors. As a result, SMI costs are estimated to increase somewhat as a result of the Balanced Budget Act. The increase in SMI costs is offset by additional premium revenue under a provision to maintain the SMI premium at the level of 25 percent of expenditures. The Balanced Budget Act makes permanent the current relationship between premium revenue and total costs. In contrast to HI, these costs will automatically be met through enrollee premiums and general revenues of the Federal government.