"Healthcare Reform Law Will Extend Life of Medicare Trust Fund
By Emily P. Walker, Washington Correspondent, MedPage Today
Published: August 05, 2010
WASHINGTON -- The healthcare reform law significantly improved the outlook for Medicare, the program's trustees said Thursday in their annual report.
Medicare's hospital trust fund will be solvent for 12 years more than projected last year, almost entirely because of savings from healthcare reform, said the trustees, which include Health and Human Services (HHS) Secretary Kathleen Sebelius, Labor Secretary Hilda Solis, Treasury Secretary Tim Geithner, and Commissioner of Social Security Michael J. Astrue.
"The outlook for Medicare has indeed improved greatly compared to this time last year, thanks to the Affordable Care Act," Sebelius said at a Thursday morning press conference.
Because of the projected savings under the healthcare reform law, Medicare's Hospital Insurance Trust Fund is not scheduled to be exhausted until 2029, the trustees said. While Medicare is still not financially sustainable in the long term when faced with an aging population, the report offers a rosier view than last year's report, which predicted bankruptcy of the Hospital Insurance Trust Fund in 2017.
Two separate trust funds provide money for Medicare: the Hospital Insurance Trust Fund, which pays for inpatient hospital and related care; and the Supplementary Medical Insurance Trust Fund -- including Part B, which pays for outpatient physicians and other outpatient services, and Part D, which covers prescription drugs.
Hospital Insurance Trust Fund costs are estimated to continue to exceed trust fund income for the next few years, but savings under healthcare reform are expected to result in fund surpluses from 2014 to 2022.
The "savings" referenced by the trustees are projected to stem from making the healthcare system more efficient and by providing lower annual increases in Medicare payments to hospitals, skilled nursing facilities, home health agencies, and most other providers.
"These are very, very, very substantial improvements in the rate of growth in healthcare costs," Geithner said. "It's a very promising set of reforms."
The Supplementary Medical Insurance Trust Fund, meanwhile, is also projected to cost much less as a result of healthcare reform. Part B spending currently accounts for 1.5% of the nation's Gross Domestic Product (GDP), according to a fact sheet from the Centers for Medicare and Medicaid Services (CMS). Last year's trustees report projected that Part B spending would increase by 4.5% by the end of the 75-year projection period; but this year's report projected Part B spending to reach only 2.5% of GDP after 75 years.
However, that projection assumes that the short-term sustainable growth rate (SGR) fix passed by Congress in June will indeed expire on Dec. 1, at which point doctors will be subject to a 23% cut in Medicare reimbursements, HHS Secretary Kathleen Sebelius said.
In all likelihood, Congress will intervene to block the cut, as it always does. But Sebelius stressed that President Obama is committed to finding a long-term fix for the flawed formula.
The American Medical Association (AMA), which has long called for a permanent fix to the SGR, said the report reinforces that steep cuts are looming.
"This report is just the latest warning bell for members of Congress who know the Medicare physician payment system is broken," said J. James Rohack, MD, immediate past-president of the AMA in a press release. "Congress has four months left to act before the steep 23 percent cut to physicians begins, hurting seniors' healthcare. "
Part D spending was lower than anticipated in 2008 and 2009, and is projected to grow at a slower rate over the next decade than predicted. However, those savings are partially cancelled out by the reform law's phasing out of the so-called "doughnut hole," a gap in coverage during which seniors must foot their own bill for prescription drugs. Overall, Part D costs are projected to grow at an average of 9.4% annually over the next decade, the trustees said.
The report also examined the sustainability of Social Security, which is projected to run dry in 2037, at which point it would only be able to provide about 75% of benefits through 2084."
There are some "ifs" in there but I guess it could be true.......maybe.
I can't help wondering if the persons on Medicare will end up either going without health care that isn't covered because benefits are being cut or will end up paying out of their own pockets (the difference between the charge and the coverage), which means they will go without care because they can't afford it.
If I've misunderstood the concept, can someone please explain it to me?
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