Trustees: Medicare Exhausted in 2026
Medicare’s trust fund will start running out of money in 2026, two years later than the program’s trustees estimated last year as the trend toward slower spending continues.
And here’s a fact that puts an exclamation point on that trend: This year, for the first time ever, the government expects to spend less money per Medicare beneficiary than it did the year before, in part because of the sequester.
The trustees in the annual report noted that the long-term challenges to the program remain as the massive baby boomer population heads into retirement. They called on Congress to address Medicare’s troubled finances “as soon as possible.”
But the looming crisis is less imminent.
Medicare and other entitlement spending will remain hot buttons in the coming fight over the budget and the debt ceiling, but the spending slowdown will help keep the lid on one political flash point at least: the hugely controversial Independent Payment Advisory Board.
Based on the new report, the chief Medicare actuary concluded that Medicare spending won’t trigger action from the controversial panel, which is tasked with curbing the program’s costs if they run too high, through at least 2015.
Administration officials said the improved outlook reflects changes in health care spending as well as policies put in place under President Barack Obama’s health law.
“The Medicare report demonstrates, once again, the importance of the Affordable Care Act, which has strengthened Medicare’s finances by reining in health care costs,” Treasury Secretary Jack Lew said. Indeed, the trust fund has been extended by nine years since the health reform law passed.
But Medicare trustee Robert Reischauer warned against seeing this year’s report as a significant development for Medicare, saying, “I think that such an interpretation would be a mistake.”
He said the “discipline” in the federal health care law is partly responsible for the slowdown in spending in addition to the country’s broader economic problems, but sustaining the trend will require concerted effort in the public and private sectors that is anything but guaranteed.
Congress must make “unavoidable adjustments” for cost savings beyond what’s in the Affordable Care Act, and the sooner it acts, the less disruptive those changes will be, he said.
Health care providers must become more efficient, and employers, labor unions, insurers and others must pitch in to reinforce the transformation of the health care payment system begun in the federal health care law, Reischauer said.
Filed Under: Medicare/Medicaid