WASHINGTON — The Medicare Part A hospital insurance trust
fund will be exhausted in 2024, five years sooner than was
predicted last year, according to the Medicare Board of
Trustees.
The trustees blamed the earlier date on the country's economic
downturn, which has resulted in lower tax revenues to finance the
trust fund.
The annual
target="_blank">report, released Friday, showed the fund's
income was $486 billion in 2010, but expenditures were $523
billion. In fact, the trustees said, fund expenditures have
exceeded income annually since 2008 and are projected to continue
doing so until, in 2024, dedicated program revenues would only be
able to pay 85 percent of Medicare Part A costs.
At a press briefing, Treasury Secretary Timothy Geithner said
the report makes it clear that legislators must act on entitlement
programs soon or be forced to impose tax increases, deep cuts to
benefits or both. Without the changes in the Affordable Care Act,
the fund would be depleted even sooner, in 2016.
As for Medicare Part B, the supplemental medical insurance trust
fund is adequately financed at least over the next 10 years because
premium and general revenue income are reset each year to match
expected costs, the trustees said.
However, they noted in the report, Part B costs have been
increasing rapidly. An average annual growth rate of 4.7 percent is
projected for the next five years, but that rate "is
unrealistically constrained due to a physician fee reduction of
over 29 percent that would occur in 2012 under current law," the
trustees said. "If Congress overrides this reduction, as they have
for 2003 through 2011, the Part B growth rate would instead average
7.5 percent."
While Medicare's financial outlook has been "substantially
improved" as a result of changes in the ACA, the trustees wrote
that in the long range, "much of this improvement depends on the
feasibility of the ACA's downward adjustments to future increases
in Medicare prices for most categories of health care
providers."
As of 2010, 47.5 million people were covered by Medicare,
including 39.6 million aged 65 and older, and 7.9 million
disabled.
Read the full report at target="_blank">www.cms.hhs.gov/ReportsTrustFunds/downloads/tr2011.pdf.
