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June 05, 2018 01:00 AM

Medicare funds drying up faster than estimated

Virgil Dickson
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    The Medicare trust fund will be insolvent by 2026, three years earlier than estimates released by the Trump administration last year.

    That's partly due to the Tax Cuts and Jobs Act which called for eliminating the individual mandate, according to the 2018 Medicare Trustee Report released Tuesday. President Donald Trump signed the act into law late last year. Eliminating the individual mandate will lead to a rise in uninsured, thus an increase in uncompensated care payments to hospitals.

    Even if new legislation and polices could be enacted to increase the fund, trustees feared it would not come soon enough to abate the impact to providers expected in the coming years.

    The report once again also warned about physicians dropping out of Medicare because of the Medicare Access and CHIP Reauthorization Act.

    The so-called "Doc Fix" replaced the sustainable growth rate formula that previously calculated provider payment.

    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. That's 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."

    Medicare margins for providers also worried trustees. By 2040, approximately half of hospitals, roughly two-thirds of skilled nursing facilities, and over 80% of home health agencies would have negative total facility margins potentially leading to access problems, the report found.

    Hospitals' aggregate Medicare margin was negative 9.6% in 2016, compared to negative 5.3% in 2009, according to MedPAC's March 15 report to Congress.

    Medicare Part D expenditures per enrollee are estimated to increase by an average of 6% every year for the next five years; that's higher than the projected average annual rate of growth for the U.S. economy, which is 4.7 % during that period.

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

    In 2017, Medicare covered 58.4 million people and expenditures were $710 billion up from $678.7 billion in 2016. In 2016, the federal program for the elderly and disabled covered 56.8 million beneficiaries.

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