WASHINGTON — The Medicare Part A hospital insurance trust fund will be exhausted in 2024, five years sooner than was predicted last year, according to the Medicare Board of Trustees.
The trustees blamed the earlier date on the country's economic downturn, which has resulted in lower tax revenues to finance the trust fund.
The annual report, released Friday, showed the fund's income was $486 billion in 2010, but expenditures were $523 billion. In fact, the trustees said, fund expenditures have exceeded income annually since 2008 and are projected to continue doing so until, in 2024, dedicated program revenues would only be able to pay 85 percent of Medicare Part A costs.
At a press briefing, Treasury Secretary Timothy Geithner said the report makes it clear that legislators must act on entitlement programs soon or be forced to impose tax increases, deep cuts to benefits or both. Without the changes in the Affordable Care Act, the fund would be depleted even sooner, in 2016.
As for Medicare Part B, the supplemental medical insurance trust fund is adequately financed at least over the next 10 years because premium and general revenue income are reset each year to match expected costs, the trustees said.
However, they noted in the report, Part B costs have been increasing rapidly. An average annual growth rate of 4.7 percent is projected for the next five years, but that rate "is unrealistically constrained due to a physician fee reduction of over 29 percent that would occur in 2012 under current law," the trustees said. "If Congress overrides this reduction, as they have for 2003 through 2011, the Part B growth rate would instead average 7.5 percent."
While Medicare's financial outlook has been "substantially improved" as a result of changes in the ACA, the trustees wrote that in the long range, "much of this improvement depends on the feasibility of the ACA's downward adjustments to future increases in Medicare prices for most categories of health care providers."
As of 2010, 47.5 million people were covered by Medicare, including 39.6 million aged 65 and older, and 7.9 million disabled.
Read the full report at www.cms.hhs.gov/ReportsTrustFunds/downloads/tr2011.pdf.
