Government officials and policy experts again underscored the urgency for system reforms to rein in rising healthcare costs as Medicare's trustees delivered a mixed report card last week.
In the short term, Medicare's hospital insurance trust fund is projected to remain solvent and cover benefits through 2024, the same projection the trustees reported last year. Scheduled hospital insurance tax and premium income would be sufficient to cover 87% of estimated hospital trust fund costs in 2024 and 69% by 2086, according to the 2012 report.
The trustees concluded that although the Patient Protection and Affordable Care Act makes changes to Medicare that improve the program's financial outlook, there is a “strong likelihood that certain of these changes will not be viable in the long range.” For instance, annual price updates for most nonphysician services will be adjusted downward annually because of productivity growth in the economy. But the trustees warn that most healthcare providers cannot improve their productivity to this degree because healthcare services are so labor-intensive.
“There's some concern among providers that they may not be able to work with the provisions of the health reform law in terms of productivity adjustments and sequestration,” said Juliette Cubanski, associate director of the program on Medicare policy at the Kaiser Family Foundation. Cubanski also said there's an expectation that hospital utilization will increase, but that sequestration will cut provider payments by 2%. “It elevates the importance in being active participants in the delivery of health system reforms and being an active participant in adopting value-based purchasing—and coming to the table with new ideas.”