Lawmakers, taxpayers and health organizations concerned about Medicare's sustainability can breathe a small sigh of relief, if not hold their breath.
In its 49th annual report, the Medicare Trustees are projecting that the hospital insurance fund will remain solvent until 2030, four years longer than predicted last year.
The extra years are thanks in part to per capita spending growth that for now is lower than the growth of inflation, a trend that, in turn, is thanks to some of the 165 Medicare provisions in the Affordable Care Act, wrote the Medicare Trustees, including the secretaries of the Health and Human Services and Treasury departments.
While it looks like the hospital insurance fund will have surpluses in 2015 through 2022, after that, the deficits seen since 2008 are likely to resume, the Medicare Trustees estimate.
The Trustees' estimated 2030 depletion date jives with projections by the Congressional Budget Office and also assumes that Congress will, finally, address the sustainable growth rate formula (the doc pay cut) with a small 0.6 percent raise.
The Trustees are also banking on the ACA's cost-control goals and assuming that all of them, including provider payment reductions, will be implemented despite industry resistance.
Payment reductions are "achievable if healthcare providers are able to realize productivity improvements at a faster rate than experienced historically," they wrote. "However, if the health sector cannot transition to more efficient models of care delivery and achieve productivity increases... then the availability and quality of healthcare received by Medicare beneficiaries would, under current law, fall over time relative to that received by those with private health insurance."
And, as Medicare Trustee Robert Reischauer noted of Medicare and Social Security, which is estimated to be solvent until 2034: "Both of these vitally important programs are fiscally unsustainable over the long run and will require legislative intervention to correct."
Preparing for future surge
At the same time Medicare and Social Security are expected to face solvency problems, the Baby Boomer retirement wave will be surging. By 2030, some 72 million Americans will be 65 or older, double the number in 2000, and they'll represent at least 18 percent of the population, up from about 14 percent today, according to Pew.
Those trends represent perhaps the largest business opportunity for the healthcare business since the advent of Medicare -- if providers and Medicare Advantage insurers can contend with new reimbursement models and offer high-value health services for what promises to be one of most chronically-ill populations in history.
While private insurers, Medicare and even some state Medicaid programs are taking steps towards value-based reimbursement and providers across the spectrum are using new delivery models for preventive, chronic and acute care, the potential for system-wide transformation remains uncertain, the Trustees argued.
"The ability of new delivery and payment methods to lower cost growth rates is uncertain at this time, since specific changes have not yet been designed, tested, or evaluated," they wrote. "Hopes for success are high, but at this time there is insufficient evidence to support an assumption that improvements in efficiency can occur of the magnitude needed to align with the statutory Medicare price updates."