As of Tuesday, January 24, 2017
I recently wrote about the need to heed the Social Security trustees’ warnings and shore up Social Security. Like the requirements for the Social Security Trustees to annually assess the state of the trust funds that support the Social Security program, the Medicare Trustees are also required by law to report to Congress on the state of the Medicare trust funds.
In June, the Medicare trustees reported Medicare’s Part A Trust Fund is expected to be bankrupt in 2028, two years earlier than the trustees projected the previous year. That means, if left unfixed, the Medicare program will be unable to assist the many seniors and disabled who depend on it.
The Centers for Medicare & Medicaid Services report that 55.3 million people utilize Medicare at a cost of $648 billion. As explained in the trustees’ report, Medicare is financed through two trust funds. The Hospital Insurance Trust Fund (HI), known as Medicare Part A, assists with hospital, home health services following hospital stays, skilled nursing facility and hospice care expenses. The Supplementary Medical Insurance Trust Fund (SMI), which supports Medicare Part B and Part D, helps cover physician, outpatient hospital, home health, subsidized access to drug insurance coverage, cost-sharing subsidies for low-income enrollees and other expenses. Medicare Part C, which enables enrollment in private Medicare Advantage and other health insurance plans, is supported by funds from both HI and SMI.
The trustees found that 46.3 million Americans aged 65 and older and 9 million who are disabled, receive health care through Medicare, which is at serious risk if changes are not implemented. The trustees’ report included the following concerning projections in need of timely action:
• As in past years, HI is not adequately financed over the next 10 years;
• Expenditures will increase in future years at a faster pace than either aggregate workers’ earnings or the economy overall;
• Medicare spending growth, if realized, would substantially increase the strain on the nation’s workers, the economy, Medicare beneficiaries and the federal budget;
• HI tax income and other dedicated revenues will fall short of HI expenditures in most future years;
• The sooner solutions are enacted, the more flexible and gradual they can be.
While 12 years may seem like a long time to fix the problem, it is not when considering how long it takes to build consensus on solutions, and with each passing year, the options for addressing the issues dwindle and become more painful. To prevent Medicare’s insolvency, we must address its cost burden now.
Time is wasting, and the Medicare trustees are not alone in sounding the alarm. The Joint Economic Committee, reflecting on the trustees’ findings and similar projections by the nonpartisan Congressional Budget Office, also noted the expected cuts to Medicare through Obamacare that will make it harder for seniors to access services and advised that “sensible reforms now would prevent more drastic measures in the future.” The Medicare trustees called on Congress and the executive branch to “work closely together with a sense of urgency” to address the depletion of the trust fund growth in expenditures. We must listen to their warnings and act now.