Medicare Funds Are Shrinking Quickly

Washington By 2026, Medicare Part A will be insolvent, and the government’s expenditures for Medicare Part B will outweigh premiums by a ratio of four to one, according to a sobering report from Medicare’s Boards of Trustees.

Each year, the trustees for Medicare’s Hospital Insurance and Supplementary Medical Insurance Trust Funds report to the U.S. Congress on the financial status of the funds.

The HI fund lost ground this year, as hospital admissions increased and the Bureau of Economic Analysis predicted lower taxable wages, the trustees said. Similarly, the outlook for the SMI fund worsened, due to the rapid growth of Medicare Part B spending and the passage of reimbursement increases for physicians.

“Over the next 10 years, the average annual increase in [SMI] benefit payments is estimated to be 7.1 percent, compared to a growth rate of 5.3 percent for [gross domestic product],” the report said.

During 2003, the SMI fund will run at a deficit of $7.4 billion, according to Tommy Thompson, a trustee who also is secretary of the Health and Human Services Department.

More information about this report is available at www.cms.hhs.gov/publications/trusteesreport.

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