Medicare Fund Gets an Independent Actuarial Review

Margaret Dick Tocknell, for HealthLeaders Media , May 25, 2011

Productivity Adjustments
Unlike the Trustees report, the actuarial report assumes that productivity adjustments for increasing provider efficiency would not be sustainable over the long run because the same level of improvement couldn't be maintained. That means that reductions in spending on hospital services touted in the Trustees report would be more difficult to achieve.

With the changes, according to the actuarial report, physician reimbursements for 2012 would increase from $220.3 billion to $248.2 billion. That means that instead of dropping 3.7% from 2011 to 2012 as per the Trustee report, reimbursements would actually post an 8.5% increase.

Under current law hospitals would post an actuarial deficit of 0.5% over 25 years based on the Trustee report. Based on projections in the actuarial report, that deficit would be 0.62%. And without the cuts, hospital costs would become a larger part of the Gross Domestic Product: an estimated 2.03% in 2030 under current law compared to 2.14% according to actuarial projections. No dollar figures are included for hospitals.

The actuarial report concludes that "the projections shown in the 2011 Medicare Trustees Report for current law should not be interpreted as our best expectation of actual Medicare operations in the future, but rather as illustrations of the very favorable impact of permanently slower growth in healthcare costs, if slower growth can be achieved."

Margaret Dick Tocknell is a reporter/editor with HealthLeaders Media.

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