Medicare’s finances get shakier

 - 
Wednesday, June 6, 2018

WASHINGTON – Part of the Medicare Trust Fund will run out of money three years earlier than expected, according to a new report from the Medicare Board of Trustees.

The report says Medicare’s Hospital Insurance Trust Fund will become insolvent in 2026 and will no longer be able to fully cover inpatient care.

The report also says the Supplementary Medical Insurance Trust Fund, which covers Medicare Parts B and D, is expected to be adequately financed in all years, because premium income and general revenue incomes are reset annually to cover expected costs. The fund had $88 billion in assets at the end of 2017. The report warns, however, that an aging population and rising healthcare costs are causing SMI projected costs to increase from 2.1% of the gross domestic product to 3.6% in 2037.

The report projects that total Medicare costs (including both HI and SMI expenditures) will grow from approximately 3.7% of GDP in 2017 to 5.8% of GDP by 2038, and then increase gradually thereafter to about 6.2% of GDP by 2092.

The report notes that CMS continues to enact policies to strengthen the Medicare program and lower costs for Medicare recipients. Those policies include creating a patient-driven healthcare system with greater price transparency and interoperability; and removing outdated regulations.

CMS is also increasing choice in Medicare Advantage programs, and is working to lower the cost of drugs for seniors.