The Medicare Hospital Insurance Trust Fund will go bust four years earlier than was predicted last year, in 2026 instead of 2030, under new projections from the program's trustees. While the fund's current status is "favorable," the trustees said, Medicare Part A funding shortfalls could emerge by 2012 as demand outpaces tax revenue. That would require the government to draw on trust fund assets, depleting the fund by 2026. The forecast assumes continued growth in volume and intensity of services and a large increase in beneficiaries from the aging baby boom generation. The earlier depletion date reflects a lower taxable payroll than last year and an increase in the number and complexity of hospital admissions. The trustees said the Part B trust fund, which covers physician services, will remain adequately financed, but only because under law, general revenue and beneficiary premiums are automatically adjusted to support the program.
Medicare costs, including both hospital and physician services, will more than triple over the next 75 years, under the latest projections. And by 2077, the gap between revenue and spending will equal 3.5% of the gross domestic product, the trustees said. Yet according to another study, Medicare is better than private health plans at controlling per-beneficiary spending growth. Medicare spending per enrollee has grown at an annual rate of 9.6% since 1970, compared with 11.1% among private insurers, according to the report, which appears in the March/April issue of Health Affairs. At least some of the difference was attributed to Medicare's structured payment system and regulatory controls. Read the Medicare trustee's report or the an abstract of the cost-control study. -- by Jeff Tieman