Medicare Fund Still Projected to be Solvent Until 2030

While Medicare celebrates its 50th year this month, the Centers for Medicare and Medicaid Services (CMS) announced that the trust fund supporting Medicare hospital insurance coverage is still projected to remain solvent until 2030 and cost growth continues to be low, according to a Medicare Trustees Report. Medicare spending growth per enrollee has been averaging 1.3 per cent during the last five years and is projected to be lower than "overall growth in overall health expenditures" during the next decade, according to a CMS press release announcing the report. "Growth in per-Medicare enrollee costs continues to be historically low even as the economy continues to rebound. While this is good news, we cannot be complacent as the number of Medicare beneficiaries continues to grow," said Acting CMS Administrator Andy Slavitt in the release. "That's why we must continue to transform our health care system into one that delivers better care and spends our dollars in a smarter way for beneficiaries so Medicare can continue to meet the needs of our beneficiaries for the next 50 years and beyond."

Although the SGR system was replaced, the report describes MACRA's provisions as a short term fix and says that, long-term, there will still be payment issues as additional payments and bonuses end in 2025, meaning physicians will again experience a painful payment reduction. It also notes that the MACRA solution doesn't account for economic changes that could occur or increase in physicians' costs: "The Trustees anticipate that physician payment rates under current law will be lower than they would have been under the SGR formula by 2048 and will continue to worsen thereafter." Thus, without future legislative changes "the Trustees expect access to Medicare participating physicians to become a significant issue in the long term under current law."

The Trustees recorded 2014 Medicare expenditures of $613 billion. Additionally, although the report relies on cost-cutting measures in the Affordable Care Act, the Trustees report that current projections still predict "a substantial financial shortfall" in the future unless further legislation is enacted; the Trustees recommend Congress and the Executive branch work together "with a sense of urgency" to effect such legislative action "sooner rather than later."

Takeaway: While there was much rejoicing at the repeal of SGR, the Medicare Trustees caution that it was once again a temporary fix to a payment problem that has by no means gone away.