Medicare, Social Security Still to Go Broke Now at Slower Rate
The Social Security and Medicare Boards of Trustees annual review of the programs finds Medicare is projected to have sufficient funds four years longer than what was projected last year; and reports no change from the 2013 report’s projection that Social Security funds will be exhausted in 2033.
The new projection for the Medicare Hospital Insurance (HI) Trust Fund says the program will have enough to cover its obligations until 2030, 13 years later than was projected in the last report issued prior to passage of the Affordable Care Act, according to “Fact Sheet: Social Security and Medicare Trustees Reports,” issued by the U.S. Department of Treasury following the trustees’ financial review Monday.
“The Medicare Hospital Insurance trust fund is projected to be solvent for longer, which is good news for beneficiaries and taxpayers,” says Marilyn Tavenner, administrator of CMS, in a news release. “Thanks to the Affordable Care Act, we are taking important steps to improve the quality of care for Medicare beneficiaries, while improving Medicare’s long-term solvency.”
In 2013, Medicare covered 52.3 million people: 43.5 million people aged 65 and older, and 8.8 million people with disabilities, according to the Centers for Medicare & Medicaid Services (CMS). Total expenditures in 2013 were $582.9 billion. Total income was $575.8 billion.
Lower-than-expected spending in 2013, and lower projected utilization in the types of health care needed by Medicare patients, contributed to the program’s projected extension, Tavenner says.
“Medicare spending per beneficiary has grown quite slowly over the past few years and is projected to continue to grow slowly over the next several years,” she says.
During the past four years, per capita Medicare spending growth has averaged 0.8% annually, more slowly than the average 3.1% annual increase in per capita GDP and national health expenditures over the same period.
While Social Security’s retirement and disability programs have dedicated resources sufficient to cover benefits for the next 19 years, Social Security’s Disability Insurance (DI) program faces the most immediate financing shortfall of any of the separate trust funds with its projected depletion date only two years away, in late 2016.
After the DI’s depletion date, dedicated revenues are projected to cover about 80% of scheduled benefit payments. Legislation will be needed to address the financial imbalance, the U.S. Department of Treasury says.
After Social Security’s trust fund exhaustion, annual revenues from the dedicated payroll tax will be sufficient to fund three-quarters of scheduled benefits through 2088.
For Medicare, the projected portion of scheduled benefits that can be financed with dedicated revenues is 85% in 2030 and declines slowly to about 75% in 2050 and later.
The 75-year actuarial deficit in the HI Trust Fund is projected at .87% of taxable payroll, down from 1.11% projected in last year’s report.
“This improved outlook for HI is primarily due to lower than expected spending in 2013 for most HI service categories, which reduced the base period expenditure level and contributed to the trustees’ decision to lower projected near-term spending growth,” the U.S. Department of Treasury says.
Following the Fact Sheet’s publication, nonprofit The National Committee to Preserve Social Security and Medicare (NCPSSM) issued a release touting the four-year extension of Medicare and decreased HI deficit.
“On Medicare, each year since passage of the Affordable Care Act, the trustees have reported the program’s improving solvency, this year adding an additional four years until 2030,” says Max Richtman, NCPSSM president and CEO, in a news release. “We should build on that success and continue reducing the high cost of health care system-wide, not just in Medicare.
Written by Cassandra Dowell