Medicare Fund Future Still Grim

Margaret Dick Tocknell, for HealthLeaders Media , June 3, 2013

The Medicare program's current forecast is slightly less bleak than last year's, but the fund is headed for insolvency in 2026, say the trustees of the Medicare's Hospital Insurance Trust Fund.

This isn't exactly dance-in-the-street news but the federal Medicare program is heading for insolvency at a slightly slower pace than previously forecast.

Thanks to lower projected spending, lower projected Medicare Advantage program costs, and some technical changes in calculating projections, Medicare's Hospital Insurance Trust Fund will remain solvent until 2026, the 2013 Medicare Trustees Report shows. That's two years longer than the 2012 report estimated.

The reprieve extends to 2014 premiums for Medicare Part B, which pays outpatient expenses. Those premiums are expected to remain unchanged from 2013 levels. Also, the report confirms that Medicare Part B and Part D, which provides access to prescription drug coverage, will remain adequately financed indefinitely, in accordance with current federal law.

The fact remains, however, that the Medicare program is still headed for insolvency. "The core message from the trustees is that Medicare's financial future remains in jeopardy and structural reform is essential… it cannot be argued that the status quo is sustainable," said Mary R. Grealy, in a prepared statement. Grealy is president of the Healthcare Leadership Council, a coalition of healthcare chief executives.

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1 comments on "Medicare Fund Future Still Grim"

B B Foonman (6/3/2013 at 4:36 PM)
The so-called "trust" funds are used as a red herring to keep people from realizing that Social Security and Medicare taxes are really just additional personal income taxes. The Medicare "trust fund" contains a "special type" of Treasury Bonds. They cannot be sold to raise the money to make future Social Security payouts. They can only be redeemed by the US Treasury but they are NOT counted as "debt held by the public" like real, marketable Treasury Bonds. The only way a government bond can be redeemed by the Treasury is by the government collecting taxes and fees, or borrowing elsewhere by issuing another bond. All government bonds are effectively a promise to tax in the future. A government bond that the government itself holds is a promise to pay itself in the future, but with what? Future taxes or borrowing. From the "CITIZEN'S GUIDE TO THE 2012 FINANCIAL REPORT": "In addition to debt held by the public, the Government reports about $4.7 trillion of debt outstanding.... It represents debt held by Government funds, including the Social Security and Medicare trust funds. ...these amounts are both liabilities of the Treasury and assets of the Government trust funds," The "trust funds" are both an asset and a liability to the government, i.e. a wash. The American people would be no worse off and no better off financially if the Social Security and Medicare "trust funds" were simply erased. But the American people would be less fooled if the "trust funds" were eliminated.




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