Despite rosier trust fund outlook, time running out to stabilize Medicare funding, researchers warn


Medicare researchers are ringing warning bells that time is running out for Congress to find a long-term solution to Medicare’s fiscal woes, which run much deeper than looming insolvency for the trust fund that finances Medicare’s hospital benefit.

“Overall, not surprisingly, the picture is quite troubling,” Marc Goldwein, senior policy director of the Committee for a Responsible Federal Budget, said on a June 6 webinar about the recent Medicare trustees’ report, which forecast that the the Hospital Insurance Trust Fund will go broke in 2028.

That’s two years later than last year’s estimate of 2026. But “while we may have gained a year or two in solvency, we’ve lost a year by failing to act. So we’re pretty much where we were before,” Goldwein said.


Additionally, the report’s economic assumptions are outdated and likely rosier than the true picture, according to the Committee for a Responsible Federal Budget.

As a result, the additional trust fund wiggle room could be an exaggeration.

Though “it’s tempting to interpret this as good news,” while people focus on the health insurance trust fund, Medicare’s fiscal challenges are not limited to Part A, said Erica Socker. Socker, an investor at Arnold Ventures who previously developed cost estimates for Medicare legislation at the Congressional Budget Office, spoke Tuesday at a Bipartisan Policy Center panel.

The report, which is issued annually by Medicare’s trustees, found spending is projected to grow substantially in all the program’s buckets — Parts A, B and D — as a percentage of gross domestic product over the next few decades.

This means higher premiums and more general revenue will be required over time to fund the program, straining the federal budget and the pocketbooks of Medicare beneficiaries themselves.

Lawmakers can’t wait until insolvency is around the corner before making corrections, academics said in a series of panels last week. Instead, the more quickly politicians act to increase revenue or decrease spending, the better for the health of the Medicare program and its 64 million members.

“There is a real cost to waiting,” Oliver Kim, BPC’s health policy director, said.

Dour outlook

While the specific date for HI trust fund insolvency has moved out slightly, Medicare still faces significant spending challenges.

That’s largely due to underlying demographic shifts in the U.S., said Jeannie Fuglesten Biniek, a senior policy analyst for Medicare at the Kaiser Family Foundation, on the webinar hosted by the CRFB.

“The demographic problem is really what’s driving our challenges in the future,” Fuglesten Biniek said.

The number of Americans at the qualification age for Medicare is projected to reach 95 million by 2060, rising from 16% of the total population in 2018 to 23% at that time, according to the Census Bureau.

As a result, more beneficiaries will come onto the insurance program, while the number of workers paying into the trust fund will be reduced.

In 2000, there were four workers per Medicare beneficiary. In 2060, that’s projected to fall to about 2.25, according to the trustees report.

The trust fund’s income will then become inadequate to fund Part A medical benefits. And costs to another fund that pays Parts B and D, called the Supplementary Medical Insurance trust fund, are also climbing, increasing pressure on beneficiary budgets and the federal budget.

One major driver of spending is Medicare Advantage, which is making up a rising share of costs, researchers said.

Backers of MA, where the government pays private plans to administer Medicare benefits, claim the program is more efficient than traditional Medicare. But MA has never yielded savings for Medicare, paying between 1.5% and 14% above fee-for-service Medicare between 2004 and 2020, according to the Medicare Payment Advisory Committee.

Source link



Please enter your comment!
Please enter your name here

Related articles

FHA Loan Calculator – Forbes Advisor

Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions...

Priced Out: How Dallas’ Soaring Rental Costs Fuel Homelessness

Hector Hernandez stood outside his small Oak Cliff apartment in early July on one of his last...

Sell HDFC Life Insurance Company, target price Rs 485: Reliance Broking

Broking has sell call on . with a target price of Rs 485. The current market...