Medicare's trust fund will be exhausted in 2024, according to a report Friday from the Social Security and Medicare boards of trustees. The new insolvency date is five years earlier than the trustees predicted in 2010.
Medicare trust fund will be exhausted in 2024, officials say
The accelerated trust fund insolvency was blamed on both reduced Medicare tax receipts stemming from the recent recession and rising healthcare provider salaries.
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 Friday 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.
“The big question is whether the hospitals, physicians and other providers would be happy to receive only 80%, or what have you, of what they are supposed to get,” an administration official said.
Separately, Medicare spending on physicians and drugs, which is paid for by general tax revenues, is expected to nearly double as a percentage of GDP 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.”
Additionally, the trustees reported that the Social Security Disability Insurance trust fund will be unable to pay all expected obligations by 2018, although it would still cover about 90% of payments, according to administration officials. Labor Secretary Hilda Solis called for Congress to enact legislation the administration has suggested to address that.
“We must act and act swiftly to close the gap left between revenues and expenditures,” she said.
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