Medicare Fund Forecast Bleak, but Stable
WASHINGTON -- Funding for Medicare will be exhausted in 2024, according to from the program's trustees, but federal health officials note that the program would run dry eight years sooner if not for the Affordable Care Act.
The good news is that the 2024 projection remains unchanged from last year's estimate (whereas in the exhaustion date was 11 years closer than in the preceding report).
The exhaustion date didn't creep closer in part because of using a new statistical calculation, and also because hospital expenditures were lower than expected.
According to a senior government official, there were fewer inpatient admissions in 2011 than expected, and also admissions were overall less severe, and therefore less costly, than in previous years.
The official said it wasn't clear what was driving the less-expensive hospital care, but he guessed that a greater number of simple procedures may have been performed in an outpatient setting.
Total Medicare costs are currently about 3.7% of the nation's Gross Domestic Product (GDP), but that percentage is expected to grow to 5.7% of GDP by 2035, which mirrors last year's projection.
But by 2085, Medicare costs will eat up 6.7% of the GDP, which is a notable increase from last year's projection of 6.2%.
The trustees' report, released at a press conference Monday, contained the usual warning call to transform Medicare into a more sustainable program that will provide seniors with healthcare benefits for many years in the future.
The Supplementary Medical Insurance (SMI) Trust Fund pays for outpatient physicians and other outpatient services (known as Part B of Medicare) and Part D, which covers prescription drugs.
However, "exhaustion" to actuaries means the program will only take in enough funds to pay out 75% of the benefits.
Part B -- which includes doctor's bills, outpatient expenses, and prescription drug coverage -- will remain steady because it's automatically funded each year, through legislation and insurance premiums, to meet the following year's expected costs.