CMS NEWS
FOR
IMMEDIATE RELEASE
April 22, 2019
Contact:
CMS Media Relations
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Medicare Trustees Report shows
Hospital Insurance Trust Fund will deplete in 7 years
Today,
the Medicare Board of Trustees released their annual report for
Medicare’s two separate trust funds -- the Hospital Insurance (HI) Trust
Fund, which funds Medicare Part A, and the Supplementary Medical
Insurance (SMI) Trust Fund, which funds Medicare Part B and D.
The
report found that the HI Trust Fund will be able to pay full benefits
until 2026, the same as last year’s report. For the 75-year
projection period, the HI actuarial deficit has increased to 0.91 percent
of taxable payroll from 0.82 percent in last year’s report. The change in
the actuarial deficit is due to several factors, most notably lower
assumed productivity growth, as well as effects from slower projected
growth in the utilization of skilled nursing facility services, higher
costs and lower income in 2018 than expected, lower real discount rates,
and a shift in the valuation period.
The
Trustees project that total Medicare costs (including both HI and SMI
expenditures) will grow from approximately 3.7 percent of GDP in 2018 to
5.9 percent of GDP by 2038, and then increase gradually thereafter to
about 6.5 percent of GDP by 2093. The faster rate of growth in Medicare
spending as compared to growth in GDP is attributable to faster Medicare
population growth and increases in the volume and intensity of healthcare
services.
The
SMI Trust Fund, which covers Medicare Part B and D, had $104 billion in
assets at the end of 2018. Part B helps pay for physician, outpatient
hospital, home health, and other services for the aged and disabled who
voluntarily enroll. It is expected to be adequately financed in all years
because premium income and general revenue income are reset annually to
cover expected costs and ensure a reserve for Part B costs. However, the
aging population and rising health care costs are causing SMI projected
costs to grow steadily from 2.1 percent of GDP in 2018 to approximately
3.7 percent of GDP in 2038. Part D provides subsidized access to drug
insurance coverage on a voluntary basis for all beneficiaries, as well as
premium and cost-sharing subsidies for low-income enrollees.
Findings revealed that Part D drug spending projections are lower than in
last year’s report because of slower price growth and a continuing trend
of higher manufacturer rebates.
President
Donald J. Trump’s Fiscal Year 2020 Budget, if enacted, would continue to
strengthen the fiscal integrity of the Medicare program and extend its
solvency. Under President Trump’s leadership, CMS has already
introduced a number of initiatives to strengthen and protect Medicare and
proposed and finalized a number of rules that advance CMS’ priority of
creating a patient-driven healthcare system through competition. In
particular, CMS is strengthening Medicare through increasing choice in
Medicare Advantage and adding supplemental benefits to the program;
offering more care options for people with diabetes; providing new
telehealth services; and lowering prescription drug costs for seniors.
CMS is also continuing work to advance policies to increase price
transparency and help beneficiaries compare costs across different
providers.
The
Medicare Trustees are: Health and Human Services Secretary, Alex M. Azar;
Treasury Secretary and Managing Trustee, Steven Mnuchin; Labor Secretary,
Alexander Acosta; and Acting Social Security Commissioner, Nancy A.
Berryhill. CMS Administrator Seema Verma is the secretary of the board.
The
report is available at https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/ReportsTrustFunds/index.html.
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