Medicare’s Hospital Trust Fund Flush
Until 2030: Good News for Boomers, Seniors
News not so good on Social Security:
projected to run out of disability benefit money in 2016, just two years
from now, unless Congress intervenes
By Julie Rovner, KNH Staff Writer
28, 2014 - Medicare’s Hospital Insurance Trust Fund, which finances
about half the health program for seniors and the disabled, won’t run
out of money until 2030, the program’s trustees said Monday. That’s four
years later than projected last year and 13 years later than projected
the year before the passage of the Affordable Care Act.
Unlike Medicare, however, the part
of Social Security that pays for people getting disability benefits is
in far more immediate danger. The Disability Insurance Trust Fund is
projected to run out of money in 2016, just two years from now, unless
the trustees said.
On Medicare, the news was mostly
positive. “Medicare is considerably stronger than it was just four years
ago,” said Health and Human Services Secretary Sylvia Burwell.
She noted that the recent slow
growth of the program’s spending will likely mean that the Medicare Part
B premium charged to beneficiaries – currently
$104.90 per month – will remain the same for the third year in a
row. “That’s a growth rate of zero percent,” she noted.
All the trustees, however,
including the secretaries of HHS, Treasury, and Labor and two public
members, stressed that Medicare’s financial problems are far from fixed,
particularly as 78 million baby boomers are on the precipice of joining.
“Notwithstanding recent favorable
developments, both the projected baseline and current law projections
indicate that Medicare still faces a substantial financial shortfall
that will need to be addressed with further legislation,”
the report said.
And “the sooner lawmakers face that
reality, the better,” said Public Trustee Robert Reischauer, a
longstanding Medicare expert and former head of the Congressional
A major change from previous years
is that for the first time the Medicare report deviates from current law
and does not assume that scheduled deep cuts to physicians who treat
Medicare patients will occur. Congress has suspended the cuts each year
since 2003, and the trustees assume that will continue until
Congress fixes the formula, known as the sustainable growth rate, or
The change “should make the Part B
cost projections more useful than they have been in the past,” said
Reischauer. Part B is the part of Medicare that pays for most physician
and outpatient costs. Part B does not technically have a trust fund,
because it is financed by a combination of general tax revenues and
beneficiary premiums, but the trustees make projections for its spending
The trustees opted not to wade into
the ongoing debate over the extent to which Medicare’s spending slowdown
can be attributed to changes to the program made in the 2010 health law.
“No one knows and certainly there
is an active debate,” said Charles Blahous, the other public trustee and
lone Republican on the panel. “And that’s not something the trustees are
going to settle,” said Blahous, a fellow at the conservative
But whatever the reason, no one
contests the slowdown has been dramatic. Medicare, which covered an
estimated 52.3 million people in 2013, spent $582.9 billion, “and, for
the second year in a row, per beneficiary costs were essentially
unchanged,” the report said.
The financial picture for Social
Security’s disability insurance fund, by contrast, is much more dire.
“The projected reserves of the DI
Trust Fund decline steadily from 62 percent of annual cost at the
beginning of 2014 until the trust fund reserves are depleted in the
fourth quarter of 2016,”
the Social Security report said. After that, the program would be
able to pay only 81 percent of scheduled benefits.
The disability program has seen a
dramatic increase in enrollment in recent years, yet Congress has
not taken any action to change its financing, which currently is 1.8
percentage points of the overall 12.4 percent Social Security payroll
tax paid by employers and workers.
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