May 14th, 2009
Reports Kaiser Network News:
The trust fund that Medicare uses to pay for beneficiaries’ hospital care will be insolvent by 2017, as the program since last year has been paying out more than it collects in taxes and interest, in part due to the worsening economy, according to a Medicare Payment Advisory Commission report issued Tuesday, the Washington Times reports. This estimated date of insolvency is two years earlier than that predicted by the trustees last year.
Medicare would have to deposit $13.4 trillion — $1 trillion higher than last year’s estimate — into an interest-earning account today in order for the hospital fund to pay its scheduled benefits over the next 75 years, according to MedPAC. The program’s total unfunded obligation, which includes doctor and prescription drug benefits, is $37.8 trillion, MedPAC said (Dickson, Washington Times, 5/13). These calculations include a 21% payment cut for providers scheduled to take effect this year. However, Congress typically has eliminated this reduction (Farnam, Wall Street Journal, 5/13).
Trustees say that while the financial standing of Social Security decreased more sharply than Medicare last year, the health program remains at greater risk of insolvency (New York Times, 5/12). This report would traditionally start a process known as the “Medicare trigger,” which requires the president and Congress to develop legislation to extend Medicare’s fiscal viability, but the House earlier this year approved rules that Democratic leaders said eliminated this requirement (CQ HealthBeat, 5/12).
The Medicare programs that cover outpatient care and pharmaceuticals — which are funded by premiums and taxes — are not at risk of insolvency, although costs for beneficiaries are expected to rise along with overall health care spending, according to CQ Today (Clarke, CQ Today, 5/12).
Read much more at Kaiser.