Medicare’s financial condition improves on reduced health costs

The main trust fund behind Medicare, the $583 billion U.S. health program for the elderly and disabled, will be exhausted in 2030, four years later than projected last year, the government reported. More

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Medicare’s financial condition improves on reduced health costs

Posted 7/28/14

WASHINGTON – The main trust fund behind Medicare, the $583 billion U.S. health program for the elderly and disabled, will be exhausted in 2030, four years later than projected last year, the government reported.

An improving economy and the health care overhaul known as Obamacare may stave off depletion of the fund as it took in more money and spent less than expected last year. The trust fund pays for hospital visits, nursing care and related services for Medicare’s 52 million beneficiaries. Its assets fell $7.1 billion in 2013 to $281 billion, less than one-third as much as a year earlier, according to a report released Monday by the program’s trustees.

Medicare’s finances are a flashpoint in health-policy debates between Republicans, who have proposed converting the program into private insurance subsidized by the U.S., and President Barack Obama. Unusually slow growth in the program’s spending, payment cuts under the Patient Protection and Affordable Care Act, known as Obamacare, and debt-reduction legislation have extended the life of the fund, called Part A.

“The jury’s yet out as to whether we can really count on the pace of cost growth being reduced,” Doug Holtz-Eakin, president of the American Action Forum, an advocacy group that has opposed Obamacare and a former head of the Congressional Budget Office, said in a phone interview. “My concern is this will take pressure off the Congress and the administration to deal with the real problem and we run the risk of a very bad surprise down the road.”

Growth rates

The program’s trustees, who include the secretaries of the Treasury, Health and Human Services and Labor departments, said payment reductions and productivity improvements under the Patient Protection and Affordable Care Act can be sustained.

“The trustees are hopeful that U.S. health-care practices are in the process of becoming more efficient as providers anticipate a future in which the rapid cost growth rates of previous decades, in both the public and private sectors, do not return,” they said in the annual report.

Social Security’s trust funds, used to make disability and retirement payments, will be exhausted in 2033, the same projection as last year, a second report said.

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