Actuaries Study Solutions to Medicare Money Woes

WASHINGTON–In a new report, The American Academy of Actuaries
has evaluated 16 possible reforms for Medicare’s financial problems
and concluded that it would take a number of the options to solve
them.

“There is no single solution to the challenges facing Medicare,”
said Cori Uccello, AAA’s senior health fellow. “Viable options will
likely require shared burden among taxpayers, Medicare
beneficiaries and health care providers.”

Among the reforms, the actuaries looked at increasing the
payroll tax rates for Medicare, increasing premiums, slowing the
growth of provider payments and increasing the age at which people
are eligible for benefits.

According to the most recent Medicare trustees’ report, by 2011,
hospital insurance expenditures will exceed all revenues into the
program trust fund, including interest income. By 2019, the trust
fund assets are expected to be depleted, and projected payroll
taxes will cover only 79 percent of benefit costs, with the
percentage decreasing thereafter, the report said.

Medicare’s Part B, which covers physician services and DME, is
already getting more of its funding from the government’s general
fund than it has in the past, according to the report.

Increasing health care costs and a dwindling ratio between
workers paying into Medicare and beneficiaries taking out of the
program are the reasons for its budget problems, the actuaries
said.

“Reforms to the Medicare program are needed, and the sooner the
better,” the report said, noting that mounting Medicare
expenditures will strain the federal budget–and maybe the entire
economy.

To download the report, click here.