Medicare Funds to Run Out by 2024

May 17, 2011
Laura Enderle Associate Editor

One of the recession's biggest casualties could be the trust fund supporting inpatient care for Medicare beneficiaries.

One of the recession’s biggest casualties could be the trust fund supporting inpatient care for Medicare beneficiaries.

The government program that provides health benefits for the nation’s seniors will soon run dry, according to numbers released last Friday, May 13. In their annual report on Medicare’s financial health, the program’s trustees announced that funding for the Medicare Hospital Insurance Trust Fund will be depleted by 2024.

The projected expiration date is 5 years sooner than last year’s estimate of 2029. Further, the board warned that “the fund is not adequately financed over the next 10 years.” Trustees attributed the 5-year change in part to a 2010 decline in tax revenue caused by the economic recession.

Despite its grim prognosis for Medicare’s hospital fund, the report was not devoid of bright spots—the most notable being the impact of health care reform. Trustees said the fund will remain solvent 8 years longer than it would have if reforms in the Patient Protection and Affordable Care Act had not been passed.

“This report shows that without the Affordable Care Act, the outlook for the Hospital Insurance Trust Fund today would be much worse,” said Donald Berwick, MD, Administrator of the Centers for Medicare & Medicaid Services (CMS) and secretary of the board.

Trustees also reported that the Supplementary Medical Insurance Trust Fund, or Medicare Part B, had lower-than-expected expenditures in 2010 and is “in financial balance.” Whereas the hospital fund covers inpatient care, Part B covers outpatient care and is supported by a combination of beneficiary premiums and general tax revenue.

Medicare Part D, which covers prescription drug benefits for Medicare enrollees, is also in balance, according to trustees. The latest assessment reflects lower-than-expected costs in 2009 and 2010, combined with an anticipated decline in prescription drug spending over the next decade.

Still, trustees said, prompt action is urgently needed to ensure the long-term survival of Medicare through 2024 and beyond. In a report on a press briefing, NPR quoted Robert Reischauer, an economist and public trustee for Social Security and Medicare, who said that “under current law, these vitally important programs are on unsustainable paths.”

The board’s complete recommendations are published in the 2011 Medicare Trustees Report.

For other articles in this issue, see:

  • Pregnant Women Benefit from Early Flu Shots
  • Helping Heart Patients Streamline Drug Routines