MEDICARE FACES INSOLVENCY SOONER / The Medicare trust fund will be exhausted in 2024, five years sooner than earlier predicted.
Medicare’s trust fund will be exhausted in 2024, according to a report from the Social Security and Medicare boards of trustees. The new insolvency date is five years earlier than trustees predicted in 2010, a result trustees blamed on reduced Medicare tax receipts and rising pay for providers. Obama administration officials responded to the report by highlighting the effects of the Patient Protection and Affordable Care Act, which they credited with lowering future Medicare spending by 25%. “Having the ACA in place is the main reason these projections are not worse,” HHS Secretary Kathleen Sebelius said at a news conference. If the hospital trust fund is exhausted, an administration official said, it would delay provider payments until additional tax revenue was received or allow payment of only portions of provider bills. Separately, Medicare spending on physicians and drugs, which is paid for by general tax revenue, is expected to nearly double as a percentage of gross domestic product over the next 25 years, according to the report. However, that estimate is based on a 29.5% physician reimbursement cut going into effect at the end of this year, which an administration official said is “not very realistic.”
Treasury Secretary Tim Geithner, far left, listens during a news conference about the report.