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Medicare Trustees Report – Medicare Part A Solvency Remains Stable

On July 22, 2015, the Medicare and Social Security Trustees issued the 2015 Annual Report of the Boards of Trustees of the Federal Hospital Insurance Trust Fund and the Federal Supplementary Medical Insurance Trust Fund.

Good News: In short, the projected solvency of the Part A Trust Fund remains unchanged from last year’s estimate: the Trust Fund will remain solvent – meaning it will be able to meet all of its financial obligations – through 2030.  In addition, the program’s long-term fiscal outlook has improved.

Note on Trust Fund Solvency: Even if the Part A Trust Fund were to become insolvent, the program will still be able to pay out 86 percent of its benefits (and, if current projections hold, 80 percent by 2050). While not ideal, this is a far cry from “bankruptcy.”  Further, the date of projected insolvency is not set in stone, and could easily change. The Trust Fund largely reflects the health of the economy. At various times since 1970, the trustees have projected Trust Fund insolvency in as few as 4 years or as many as 28 years.  While the Part A Trust Fund is mostly funded by payroll taxes, Medicare Part B is funded by a certain percent of general revenues and premiums, and therefore cannot “go broke.”

Things to Watch:

  • Spending slowdown… slows down.  Over the last few years, Medicare spending has grown at a historically slow rate; the Trustees report states, however, that spending in 2014 rose at a higher rate than in the last few years, due, in part, to increased outpatient costs and high-cost prescription drugs;
  • Projected significant increase in Part B premium for some.  In part due to increased Part B expenditures, the monthly Part B premium (currently $104.90) could increase to $159.30 for approximately 30% of beneficiaries; because Social Security does not expect there to be a cost of living adjustment (COLA) to Social Security payments next year, the remaining 70% of beneficiaries will be protected by a “hold harmless” provision of the Medicare statute (the 30% of affected individuals are those who will be new Medicare enrollees next year, those with income-related premiums (incomes higher than $85,000 for individuals) and those beneficiaries who pay their premiums directly instead of having it deducted from their Social Security checks, and individuals dually eligible for Medicare and Medicaid).   At this point, things can change; according to press reports, the Secretary of Health and Human Services has some policy options to lessen premium increases.

For more information, see., e.g., Kaiser Health News “Good News Bad News in Medicare Trustees Report” by Phil Galewitz (July 23, 2015)  “Social Security Disability Benefits Face Cuts in 2016, Trustees Say” Robert Pear, NYTimes (June 22, 2015),  Politico article: “Date for Medicare’s Insolvency Remains 2030” by Paul Demko (June 22, 2015):

Kaiser Family Foundation Reports: Public Opinions on Medicare and Medicaid; Medicare Advantage Enrollment Update

The Kaiser Family Foundation (KFF) recently issued two reports that may be of interest to Medicare advocates and beneficiaries.

Medicare and Medicaid at 50 Findings

On July 17, 2015, KFF released the results of a poll conducted to measure public views about the Medicare and Medicaid programs (or read the press release)

Among the findings, KFF reports that:

  • A strong majority (70%) say that Medicare should continue to ensure all beneficiaries get the same defined set of benefits;
  • Large majorities in all age groups prefer Medicare’s current structure to changing Medicare to a premium support (or voucher) model;
  • Two-thirds (68%) say that changes are needed to keep Medicare sustainable for the future; and
  • An overwhelming 87% of the public support allowing the federal government to negotiate drug prices with pharmaceutical companies

Medicare Advantage 2015 Spotlight: Enrollment Market Update

In June 2015, KFF released a report updating Medicare Advantage (MA) enrollment data.

Overall, the report notes that “[d]espite concerns that reductions in payment to Medicare Advantage plans enacted in the Affordable Care Act of 2010 (ACA) would lead to reductions in Medicare Advantage enrollment, the number and share of Medicare beneficiaries enrolling in Medicare Advantage plans has continued to climb.”  Since passage of the ACA, MA enrollment has increased by 5.6 million (or 50%).

Additional findings include:

  • Almost one in three (31%) of people on Medicare were enrolled in MA plans as of March 2015
  • MA enrollment continues to be highly concentrated among large firms
    • Six firms plus all Blue Cross/Blue Shield affiliates account for almost three quarters (72%) of the market
    • Together, United Healthcare and Humana account for 39% of all MA enrollment
  • MA plans provide less financial protection to Medicare enrollees than they have in the past
  • Average out of pocket spending limits have continued to rise, “exposing enrollees with significant medical needs to higher costs”

The report concludes: “With such a large share of the program dependent on products offered from a relatively small number of private firms operating at the national and local levels, the ability of Centers for Medicare and Medicaid Services (CMS) to serve as a strong fiduciary for the program becomes increasingly important as well as challenging.” 

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