Trustees for the nation’s Medicare program this week issued a bleak report on the long-term financial health of the federal program.
Because it is the second consecutive report to project that program costs would exceed 45 percent of funding revenues, trustees attached a "Medicare Funding Warning" to the report. That complies with policies outlined in the Medicare Prescription Drug, Improvement and Modernization Act of 2003.
Although they pushed back the projected date when funding for Medicare could run out, trustees indicated that the program is increasingly unaffordable.
As healthcare costs continue to rise, expenditures for the program exceeded $408 billion in 2006, accounting for 3.1 percent of the total gross domestic product, the report said. In 75 years, spending is likely to jump to 11 percent of the GDP if substantial changes to the program are not made.
Health and Human Services Secretary Michael Leavitt said the report highlights the need to act quickly on Medicare reform. Leavitt said the federal government is making progress in finding the balance between long-term financial solvency and up-to-date care for senior citizens, "But today's report shows us that we have a long way to go."
The report’s warnings may portend bad news for senior citizens and taxpayers, but there may be financial implications for physicians as well.
The American Medical Association says the trustees’ report highlights the need for healthcare reform and raises the likelihood that physicians will experience additional cuts in reimbursement for providing services for Medicare beneficiaries.
"The AMA has grave concerns about the overall stability of the Medicare program, and our nation needs creative solutions for long-term reform," said AMA Board Chair Cecil Wilson, MD. He said the AMA is concerned that Medicare may increasingly reduce physician payments as a way to slow the drain on Medicare’s trust funds. "Arbitrary, drastic payment cuts to the physicians who are the foundation of Medicare are not the answer," Wilson said.
In recent months, the Congressional Budget Office warned that physicians could face as much as a 10 percent reimbursement cut in 2008. Those cuts could reach 41 percent over nine years, the CBO said.
Leslie Norwalk, acting administrator for the Centers for Medicare & Medicaid Services, said the agency is working to transform Medicare from a passive payer to an active purchaser of quality health.
"The Trustees’ report is yet another important reminder that we must do all we can to better manage this unsustainable growth in healthcare costs," Norwalk said.