Trustees' report says Medicare will be insolvent by 2029

The Medicare trust fund will be insolvent by 2029, the program's trustees reported today.

The prediction is a year later than the 2028 date the Obama administration outlined in last year's report. The Congressional Budget Office in January 2016 estimated the program would be solvent only until 2026.

Based on the new findings, the feared Independent Payment Advisory Board, which was designated by the Affordable Care Act to rein in Medicare costs if they grew faster than a set rate, will not be activated.

That's likely good news as the board, called a death panel by ACA opponents, has never had to be formed. There hasn't been the need, and some say, the willingness to expend the political capital. With midterm elections coming and possible fallout likely if Republicans repeal the ACA, this is one less possible political headache to worry about. Also of note, 2029 is 12 years longer than projected estimates before the Affordable Care Act become law.

However, trustees are worried doctors will exit the program anyway. The report contained new concerns about access to physicians in the coming years due to the Medicare Access and CHIP Reauthorization Act.

MACRA replaced the physician payment updates under the sustainable growth rate formula, which clinicians were paid under for years.

Under MACRA the annual physician payment update for 2017 through 2019 will be 0.5%. For 2020 through 2025, there will be no payment update, which alarmed the trustees.

"These amounts do not vary based on underlying economic conditions, nor are they expected to keep pace with the average rate of physician cost increases," the report said. "Absent a change in the delivery system or level of update by subsequent legislation, access to Medicare-participating physicians may become a significant issue in the long term under current law."

The new insolvency date does incorporate modest savings from the agency's move to value-based care, including accountable care organizations. However, exact figures were not broken out.

"The innovations being tested under the ACA, such as bundled payments or accountable care organizations, could reduce incentives to adopt new cost-increasing technologies and could contribute to greater efforts to avoid services of limited or no value within the service bundle," the report says.

Medicare Part D expenditures per enrollee are estimated to increase by an average of 6.4% annually over the next five years; that's higher than the projected average annual rate of growth for the U.S. economy, which is 5.2 % during that period.

The report found that these costs are trending higher than previously predicted, particularly for specialty drugs.

In 2016, Medicare covered 56.8 million people and expenditures were $678.7 billion up from $647.6 billion and 55.3 million beneficiaries in 2015.

An edited version of this story can be found in Modern Healthcare's July 17 print edition.