Medicare Hospital Fund Insolvent by 2024

The Medicare Hospital Insurance Trust Fund, which covers Part A hospital benefits, will remain solvent until 2024, according to a new report that was put out by the program’s trustees.

Starting in 2024, however, the trust fund would only be sufficient to cover about 87% of expenses, with that figure falling to 67% by 2050.

These figures are similar to financial projections released in last year’s Medicare Trustees report.

The Medicare Supplemental Medical Insurance Trust Fund, which covers physician visits and prescription drugs, has adequate funding for at least the next 10 years, the trustees also reported.

But the costs for the Part B and Part D programs are rising. For example, total costs under Medicare Part B, the program which covers physician and other outpatient services, are expected to increase annually at 4.9% for the next 5 years. The Part D prescription drug program’s costs are projected to rise by 8.8% through 2021.

The projected lower spending growth for Medicare Part B is based on Congress allowing a nearly 31% cut to Medicare physician fees to occur on Jan. 1, 2013. The trustees said they doubt that lawmakers would allow that type of cut to happen.

"It’s almost certain that lawmakers will override this reduction and that Medicare Part B expenditures will therefore be higher, conceivably as much as 12% higher than is reported in these reports for 2013," according to Robert D. Reischauer, who is one of Medicare’s public trustees as well as the former president of the Urban Institute.

Health and Human Services Secretary Kathleen Sebelius, who also serves as a Medicare trustee, said the Affordable Care Act has added about 8 years of solvency to the Medicare Hospital Insurance Trust Fund in part through provisions that fight health care fraud, help prevent medical errors, and cut excessive payments in the Medicare Advantage program.

Without those changes, she said, the program would have become insolvent by 2016.

Whether the projections of extended solvency will turn out to be accurate depend on whether Congress moves forward with changes to the way Medicare pays physicians and hospitals, Mr. Reischauer said.

He added that it will also rely on the ability of physicians to become more efficient and on private payers to join with the government to demand changes in the health care delivery system. ☐