The Medicare Trustees Report has projected that Medicare's Hospital Insurance Fund will run out of money in 2024, five years earlier than the trustees projected in last year's annual report.
President Barack Obama's administration, looking for the silver lining in the report, said that while there is work to be done to ensure the fund's solvency, the HI Trust Fund would have run dry in 2016 without the reforms contained in the Patient Protection and Affordable Care act – an additional eight years of solvency.
[See also: Medicare trustees: Trust fund solvent through 2029; Medicare solvency: A matter of opinion?]
"This report shows that without the Affordable Care Act, the outlook for the Hospital Insurance Trust Fund today would be much worse," said Donald Berwick, MD, administrator of the Centers for Medicare & Medicaid Services. "CMS is implementing critical reforms to improve care and reduce costs and improve the overall health of Medicare's beneficiaries and the trust fund."
While administration officials focus on maintaining solvency, others point out that it's equally important to preserve the value of the program without shifting some of the cost burden to seniors.
"We must remember that preserving Medicare means not only maintaining the solvency of the trust fund, but also maintaining the value of the benefit and the financial and health protections the program provides to the people it serves," said Joe Baker, president of the Medicare Rights Center. "Half of people with Medicare live on incomes below $20,000 per year."
According to the report, HI Trust Fund expenditures have exceeded income annually since 2008 and are projected to continue doing so under current law in all future years. The trust fund has relied on interest earnings and asset redemption to meet the deficit. In 2010, Medicare tapped the trust fund for more than $32 billion to make up for the shortfall.
At current rates of spending and cost growth, HI Trust Fund assets are projected to cover annual deficits through 2023, with asset depletion beginning in 2024.
The trustees report noted the five-year change from last year's report is due to the slowdown of the national economy, which caused tax revenues to decline and combined with higher-than-expected costs. The report pointed out that projecting earlier depletion dates from a previous report is not an uncommon occurrence. A seven-year-shorter projection was reported in 2004 due to similar economic conditions.
Not surprisingly, various groups jumped on the announcement to make political points.
J. James Rohack, MD, immediate past president of the American Medical Association, used the Trustees Report to hammer home the need to do away with the current Medicare physician payment formula, called the sustainable growth rate – or SGR – in favor of a more lasting payment formula.
[See also: House committee asks doctors for ideas on fixing SGR]
"Physicians who care for Medicare patients form the foundation of this critical program, and the Trustees confirmed today that they face a steep payment cut of nearly 30 percent on January 1," Rohack said. "This cut is the highest ever scheduled under the broken Medicare physician payment system, and it threatens access to care for our nation's seniors, military families, people with disabilities and the baby boomers now entering Medicare. The longer it takes to reform this system, the greater the cost."
The trustees' projection didn't take into account any adjustment to the physician pament formula currently on the books and includes the anticipated payment cut of 29 percent to take effect Jan. 1, 2012.
But Baker noted payment formulas and asset depletion dates aren't at the heart of the problem.
"The problem is growing costs in the healthcare sector overall, and shifting costs from one party to another does nothing to address this issue," he said. "The ACA achieves savings without cutting benefits or increasing consumer costs, through promoting prevention, paying for quality over quantity, and improving care coordination that can help people with Medicare, including those with multiple chronic conditions, stay healthier. It is solutions like these that we must support to make Medicare stronger."