Trustees say Medicare trust fund will run out in 2029, meaning no IPAB trigger

stethoscope on money
In 2017, the combined cost of the Social Security and Medicare programs is estimated to equal 8.5% of GDP. (Getty/Maudib)

Medicare’s hospital insurance trust fund is now projected to run out in 2029, one year later than last year’s projection, according to the Medicare and Social Security trustees’ annual report.

That means the controversial Independent Payment Advisory Board (IPAB) won’t be triggered; the report now predicts that won’t occur until 2021.

The Affordable Care Act designed the IPAB—which was meant to be a group of appointed members who would decide on Medicare cuts—to go into effect if Medicare spending exceeds a set limit. But since no members were ever named to the board, the Health and Human Services secretary would automatically assume control if the IPAB were triggered, raising concerns that important policy decisions would be taken out of lawmakers’ hands.

Fearing that the unpopular IPAB could be triggered by the annual trustees’ report (PDF), some healthcare trade groups recently increased pressure on Congress to repeal the provision before it adjourns for its August recess. In a statement Thursday, Mary R. Grealy, president of the Healthcare Leadership Council, emphasized that a repeal of IPAB was still crucial even though it won’t yet go into effect.

“The announcement today that IPAB will not be triggered into action this year may change the timing of the threat, but not its inevitability or impact,” she said.

Added Elizabeth Carpenter, senior vice president of consulting firm Avalere Health: “The program is designed to be difficult for Congress to overrule and may provide the Trump administration with a significant opportunity to reform the Medicare program in future years.”

Here are some additional highlights from the trustees’ annual report:

  • While the report projects the hospital insurance trust fund will run out in 2029, it says that the supplementary medical insurance trust fund, which consists of Medicare Part B and Part D, “will remain adequately financed into the indefinite future.” That’s because current law provides financing from general revenues and beneficiary premiums each year to meet the next year's expected costs.
  • The hospital insurance trust fund’s projected 75-year actuarial deficit is 0.64% of taxable payroll, down from 0.73% of taxable payroll projected in last year's report.
  • In 2017, the combined cost of the Social Security and Medicare programs is estimated to equal 8.5% of GDP. The trustees project that will increase to 11.5% of GDP by 2035 and to 12% by 2091, with most of these increases attributable to Medicare.
  • In fiscal year 2016, Medicare and Social Security accounted for 42% of all federal program expenditures.
  • Social Security and Medicare “face long-term financing shortfalls under currently scheduled benefits and financing,” the trustees state. They recommend lawmakers take action sooner rather than later to reduce those shortfalls in order to minimize negative impacts on vulnerable populations.