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July 22, 2015 01:00 AM

Medicare trust fund outlook unchanged

Shannon Muchmore
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    Medicare is an entitlement and big business.

    (This article was updated at 5:30 p.m. ET.)

    Medicare's hospital trust fund remains on track to cover all obligations until 2030, the Social Security and Medicare boards of trustees said in their annual report released Wednesday.

    In 2030, Medicare would be able to pay 86% of costs, according to the report.

    Medicare is adding 10,000 new beneficiaries a day as baby boomers reach age 65.

    But so far the demographic shift has not overwhelmed the program with costs because, for the most part, boomers are healthier than the older generations of Medicare beneficiaries.

    That has a positive impact on the bottom line, helping to hold down per-beneficiary costs. Still the trustees, some of whom were appointed by President Barack Obama are pushing for lawmakers to adequately fund the programs.

    “Growth in per-Medicare enrollee costs continues to be historically low even as the economy continues to rebound. While this is good news, we cannot be complacent,” said Andy Slavitt, the president's nominee for CMS administrator. “That's why we must continue to transform our healthcare system into one that delivers better care and spends our dollars in a smarter way for beneficiaries so Medicare can continue to meet the needs of our beneficiaries for the next 50 years and beyond."

    Those needs require meeting exponentially increasing drug costs.

    Almost immediately after the report was released Wednesday afternoon, John Rother, president of the National Coalition on Health Care and leader of the Campaign for Sustainable Rx Pricing, issued the following statement: “Contrary to the claims from pharmaceutical companies that their astronomical prices don't drive spending, the latest Medicare trustees report points to an alarming 10.9% increase in the cost of Part D drug coverage in the past year primarily due to new and expensive specialty drugs. We call for all stakeholders, including drugmakers, to come to the table and identify new ways to reward innovation without bankrupting our healthcare system.”

    The Obama administration is in the midst of overhauling the way Medicare pays doctors and hospitals to emphasize quality results over the sheer volume of procedures, tests, and services.

    HHS has set a goal of tying 30% of payments under traditional Medicare to new models of care by the end of 2016, and an increasing share thereafter.

    Among the initiatives is a proposal to change the way hospitals are paid for hip and knee replacement surgery.

    Trustees also credited the Affordable Care Act with increasing the life of the entitlement funds. “The healthcare law has also put Medicare on more stable footing by combating fraud, eliminating waste, cutting patient costs and reshaping payment models toward quality of care, not quantity of care,” Treasury Secretary Jacob Lew, a trustee, said at a news conference following release of the report.

    About 55 million retirees and disabled people are Medicare beneficiaries.

    In the report's most dire news, trustees said Social Security disability payments would have to be cut by nearly 20% late next year if no legislative changes are made.

    The retirement and disability programs combined could remain solvent until 2034, according to the report. Advocates for seniors say that gives Congress plenty of time to address the long-term problems, without cutting benefits. But some in Congress note that the longer lawmakers wait, the harder it gets to address the shortfall without making significant changes.

    "Today's report shows that we must seek meaningful, in some instances even urgent, changes to ensure the program is on stable ground for future generations," said Jo Ann Jenkins, the CEO of AARP.

    (The Associated Press contributed to this report.)

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