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Medicare to become insolvent by 2019

Case Management Weekly, April 2, 2008

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According to an article in The New York Times, a new report prepared by government actuaries and economists says that Medicare's hospital insurance fund will be exhausted in 2019, the same year that was reported last April.

The board of trustees for Medicare and Social Security projected that Medicare spending will increase from 3.2% of gross domestic product in 2007 to 10.8% in 2082, which is slightly less than trustees predicted last year.

According to the report, Medicare Part A would pay more out in benefits than it receives in taxes and other dedicated revenues this year.

Medicare Part B would not run out of money, according to trustees, because it has access to general revenue under federal law. Also, beneficiaries' premiums can be adjusted each year to cover about 25% of the expected costs of Part B.

In the last five years, the standard premium for Part B has increased 64% and is now $96.40 a month. The trustees said that under the existing law, the rate would stay the same in 2009 and 2010.

The report, however, said these were unrealistic projections because they assumed that Medicare payments to physicians would be cut by a cumulative 40% over the next seven years. Congress usually intervenes to block such cuts and has actually approved small increases for physicians over the past few years.

Source: The New York Times

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