Medicare hospital trust fund to last by 2024

Like last year's prediction, Medicare's hospital insurance (HI) trust fund will stay solvent until 2024, due in part to a 2 percent cut to provider payments scheduled for next year, according to the annual report released yesterday by the Medicare Board of Trustees.

The trustees noted the HI trust fund would have run out of money eight years earlier if not for the Patient Protection and Affordable Care Act.

"The trustees report tells us that while Medicare is stable for now, we have a lot of work ahead of us to guarantee its future," Acting CMS Administrator Marilyn Tavenner said in a statement. "The Affordable Care Act is giving CMS the ability to do this work, with tools to lower costs, fight fraud, and change incentives so that Medicare pays for coordinated, quality care and not the number of services."

The trust fund's cost have surpassed its income every year since 2008. This year, the trustees expect the trust fund to have enough assets to cover the difference between HI revenues and expenditures through 2023. However, it would be able to pay only 87 percent of costs in 2024 and 67 percent in 2050.

"If assets were exhausted, Medicare could pay health plans and providers only to the extent allowed by ongoing tax revenues--and these revenues would be inadequate to fully cover costs," the report states.

The trustees' report also notes many factors make Medicare's financial outcomes highly uncertain, as cost savings hinge on the long-range viability of health reform provisions, especially reduced Medicare payment rates to providers.

However, a new CMS report hails health reform's long-term potential for savings and predicts the Medicare program will save $200 billion through 2016, thanks in large part to the ACA.

"We have achieved significant tangible savings that have been passed on to beneficiaries," Jonathan Blum, director of the Center for Medicare, said in a USA Today article. "There's a tremendous opportunity for even greater savings."

To learn more:
- check out the report (.pdf)
- read the CMS announcement
- read the USA Today article

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