Dive Brief:
- The Boards of Trustees for Medicare, which report annually on the finances and actuarial status of the program, announced their latest report Wednesday.
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The report bumps the estimated depletion date for Medicare's hospital insurance (HI) trust fund up by two years compared to last year's report, predicting program insolvency in 2028.
- It also predicts the ACA's highly controversial Independent Payment Advisory Board (IPAB) will be triggered in 2017 and again in 2022. IPAB was created to achieve Medicare savings through fast-tracked spending cuts.
Dive Insight:
Medicare's current financial outlook is troubling for hospitals.
HI, the Medicare trust fund that serves Medicare Part A, helps cover hospital, home health services following hospital stays, skilled nursing facilities, and hospice care for the elderly and disabled, the report explains, while a second Medicare trust fund--the Supplementary Medical Insurance Trust Fund (SMI)--serves Medicare Parts B and D.
The report projects that dedicated HI revenues will fall short of HI expenditures in the majority of the coming years, and concludes the HI trust fund does not meet the Trustees’ tests for short-range financial adequacy or long-range close actuarial balance.
The report adds that Medicare's Part B and Part D accounts are adequately financed thanks to annual adjustments to cover expected costs. However, that financing would have to grow faster than the economy in order to meet expected expenditure growth. Part B helps cover physician, outpatient hospital, home health, and other services for voluntarily enrolled beneficiaries, while Part D provides subsidized access to drug insurance coverage, as well as premium and cost-sharing subsidies for low-income beneficiaries.
"The financial projections in this report indicate a need for substantial steps to address Medicare’s remaining financial challenges," the report concluded, adding that solutions should be implemented as promptly as possible to allow sufficient time for affected individuals and providers "to adjust their expectations and behavior."