Medicare's hospital insurance trust fund will go broke in 2019, seven years earlier than previously projected and due in part to new hospital payments under the Medicare reform law, the federal government said today in its annual Medicare trustees report. HHS Secretary Tommy Thompson, however, attributed the accelerated schedule for insolvency in part to rising healthcare costs. Officials also said lower tax revenues and growing numbers of Medicare beneficiaries are putting pressure on the program. New spending under the Medicare Prescription Drug, Improvement and Modernization Act accounts for two years of the seven-year drop in anticipated solvency, Thompson and other government officials said today. One year of solvency was lost, they added, because of the $25 billion in new payments the law sets aside for rural hospitals. Asked if the Medicare program is in fiscal crisis, a senior Bush administration official said, "The financial pressure on the program is significant." The seven-year drop in the trust fund's solvency, the official said, is the largest one-year swing ever. The hospital insurance trust fund finances Medicare Part A, which covers inpatient hospital care.
Thompson said he expects provisions of the Medicare law, including disease management and competitive bidding for medical equipment, to reduce healthcare costs that are contributing to the program's distress. "The new Medicare law gives us the best tools we've ever had for understanding Medicare's finances," Thompson said. When queried about whether the Bush administration hid its higher estimates for the cost of the reform law, Thompson said the final $534 billion figure wasn't derived until Dec. 24, 2003, after the bill was signed into law. As for whether Bush administration officials told CMS Chief Actuary Richard Foster to keep his estimate from Congress, "I don't believe the White House interfered with Rick Foster and I don't think there's any evidence of that," Thompson said. -- by Jeff Tieman