Report To Estimate Earlier Trust Fund Insolvency for Medicare

The Medicare hospital trust fund faces an "extremely bleak" future and will become insolvent "earlier than previously forecast," according to an annual report scheduled for release next week by Medicare trustees, The Hill reports. Medicare Part A, the Federal Hospital Insurance Trust Fund, covers hospital, home health, skilled nursing facility and hospice care for beneficiaries. Last year, Medicare trustees estimated that the trust fund would become insolvent in 2026, and this year, the "insolvency date will be moved up by a couple of years," The Hill reports. Medicare trustees based the new insolvency date on the White House Office of Management and Budget estimate that the new Medicare law will cost $535 billion over 10 years. According to The Hill, the new insolvency date "has little to do with the new drug benefit, which is not financed out of the trust fund," but resulted in part because of provisions in the law that increased reimbursements for rural hospitals and private health plans. In addition, in the past few years, Medicare trustees had overestimated federal revenues and underestimated entitlement payments, which forced them to revise their estimates this year, according to The Hill. The report from Medicare trustees will "debunk the notion" that the new prescription drug benefit will reduce Medicare expenditures on hospital stays, according to The Hill. In addition, the report will estimate that a separate provision in the Medicare law -- under which Medicare will begin to link premiums under Part B, which covers outpatient care, to the incomes of beneficiaries -- will not "save the government as much as some policymakers hoped because there are relatively few wealthy seniors," The Hill reports. According to The Hill, the report also will estimate the cost of the Medicare prescription drug benefit over 75 years, although the "number remains under wraps." Rep. Mike Pence (R-Ind.), who opposes the Medicare law, said that analysts told him last year that the provision would cost $7 trillion over 75 years, and others "say it could be even higher," The Hill reports (Cusack, The Hill, 3/17).