Medicare trustees: Hospital fund set to run out by 2026 

Medicare spending costs money
The Medicare Board of Trustees has released its annual trust fund report. (Getty/zimmytws)

Medicare’s Hospital Insurance Trust Fund is set to run out in the next seven years, according to a new report. 

The Medicare Board of Trustees issued its annual analysis (PDF) of the trust fund, and it projects that the trust fund that backs Part A coverage will run dry by 2026. It made the same prediction last year, according to the report. 

The trust fund’s assets sat at about $200 billion at the beginning of 2019, which covers just 62% of projected Part A expenditures for this year. The trust fund has not met short-term funding goals since 2003, according to the report. 

Free Daily Newsletter

Like this story? Subscribe to FierceHealthcare!

The healthcare sector remains in flux as policy, regulation, technology and trends shape the market. FierceHealthcare subscribers rely on our suite of newsletters as their must-read source for the latest news, analysis and data impacting their world. Sign up today to get healthcare news and updates delivered to your inbox and read on the go.

The trustees note, however, that these estimates are based on current law and thus do not account for intervention from Congress or for new and emerging technologies and care models that can reduce costs. Lawmakers have never allowed the HI trust fund to run out, according to the report. 

“Projections of Medicare costs are highly uncertain, especially when looking out more than several decades,” the trustees wrote. 

RELATED: A rapidly depleting Medicare fund could renew calls for major reform 

Medicare’s Supplementary Insurance Trust Fund, which covers Part B and Part D, is set to be fully funded in the future, the trustees project.  The trustees also estimate that Medicare costs overall, including both trust funds, will reach 5.9% of the U.S. gross domestic product by 2038, and then increase more slowly to 6.5% of GDP by 2093. 

That spending growth, which is faster than growth in GDP, is tied to large numbers of people aging into Medicare, the trustees wrote. 

Michael Abrams, managing partner and co-founder of consulting firm Numerof & Associates, told FierceHealthcare that the central message of this data is that healthcare spending in the U.S. is going to continue to grow, and there have been limited interventions to stop it.

"It’s not good news," he said. "It does not seem to have provoked a great deal of angst, though it seems to me that it should."

The report suggests that it's time for providers to adjust to changing payment paradigms, as the number of people in commercial plans shrinks and the number of Medicare beneficiaries grows, and for them to begin taking lowering prices seriously. The report also offers an opportunity for the Trump administration to really focus on transparency, Abrams said.

RELATED: Increased Medicare enrollment a major driver behind healthcare spending trends over next decade, CMS report says

Centers for Medicare & Medicaid Services Administrator Seema Verma, who serves as the board’s secretary, said the report delivers “a dose of reality” as the policy debate around a Medicare for all approach heats up. 

“If we do not take the fiscal crisis in Medicare seriously, we will jeopardize access to healthcare for millions of seniors,” Verma said. 

Department of Health and Human Services Secretary Alex Azar echoed Verma, saying the report serves as a “sobering reminder” of the work needed to ensure Medicare lasts to serve seniors. 

Suggested Articles

An estimated 73 million Americans with commercial health insurance face limited choices, according to a new American Medical Association study.

Absent adequate reimbursement for time spent on complex patient care, specialists are finding it harder to sustain their practices.

Tennessee released its proposal to CMS to become the first state to convert federal Medicaid funding into a block grant.