The annual Medicare Trustees report, released Tuesday, indicates Medicare spending is growing faster than the economy, potentially leaving the Medicare Hospital Trust Fund under-financed within the next 10 years.
From this year until the end of 2017, the funds are projected to decrease from $326 billion to $96 billion, the report said.
In 2007, the United States spent $432 billion on Medicare hospital services, covering 44.1 million people. Last year, the trustees reported 43.2 million people covered by Medicare, totaling $408 billion spent in 2006.
Sen. Chuarles Grassley (R-Iowa), ranking member of the Senate Finance Committee, said the trustees' report sounds an alarm every year, yet political leaders fail to respond.
"We know that the sooner Congress acts to address long-term entitlement spending, the better because less drastic measures will be needed," he said.
"We need to act quickly and effectively to address Medicare's fiscal health, including enacting the steps proposed in the President's budget, which would postpone the insolvency date of the Part A trust fund for 10 years," said Department of Health and Human Services Secretary Mike Leavitt.
Democrats have called the President's cuts too severe and unrealistic. John D. Dingell (D-Mich.), chairman of the Committee on Energy and Commerce, said Congress should pass laws to prevent overpayments to inefficient managed care plans.
Physicians say the report only strengthens their call to reform the broken physician payment system. Currently, physicians face a 41 percent pay cut over the next nine years.
"Trying to save Medicare money by slashing physician payments will ruin the physician foundation of Medicare for current and future generations of seniors," said Edward Langston, MD, board chairman of the American Medical Association. "A startling 60 percent of physicians say this year's cut alone will force them to limit the number of new Medicare patients they can treat."