News | Radiology Business | April 22, 2019

Medicare Trustees Report Hospital Insurance Trust Fund Will Deplete in Seven Years

Trust fund for Medicare Part B and D expected to be adequately financed in all years, but aging population and rising healthcare costs will continue to grow Medicare costs

Medicare Trustees Report Hospital Insurance Trust Fund Will Deplete in Seven Years

April 22, 2019 — The Medicare Hospital Insurance (HI) Trust Fund, which funds Medicare Part A, will only be able to pay full benefits for Medicare beneficiaries until 2026, according to the 2019 annual report from the Medicare Board of Trustees. The Supplementary Medical Insurance (SMI) Trust Fund, which funds Medicare Part B and D, is expected to be adequately financed in all years, but the aging population and rising healthcare costs are projected to grow SMI costs from 2.1 percent of gross domestic product (GDP) in 2018 to approximately 3.7 percent of GDP in 2038.

For the 75-year projection period in the 2019 report, 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 had $104 billion in assets at the end of 2018 for Medicare Part B and D. 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. 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.

"At a time when some are calling for a complete government takeover of the American healthcare system, the Medicare Trustees have delivered a dose of reality in reminding us that the program’s main trust fund for hospital services can only pay full benefits for seven more years. Stripping around 180 million Americans of private coverage and adding them to Medicare won’t fix the problem. The Trump Administration is working hard to protect and strengthen Medicare and lower costs while improving quality in order to protect the program for future generations of seniors who have paid into the program their whole lives. If we do not take the fiscal crisis in Medicare seriously, we will jeopardize access to healthcare for millions of seniors," said CMS Administrator Seema Verma in a prepared statement following the report’s release.

Read the full 2019 Board of Trustees annual report.

For more information: www.cms.gov

Related Content

Videos | Radiology Business | August 02, 2019
Association for Medical Imaging Management (AHRA) President ...
Feature | Information Technology | July 31, 2019 | By Greg Freiherr
Innovation is trending toward improved efficiency — but not at the expense of patient safety, according to...
Demand for ultrasound scans at U.S. outpatient centers could grow by double digits over the next five years, according to a speaker at AHRA 2019. A variety of factors, however, could cause projections for this and other modalities to change. Graphic courtesy of Pixabay

Demand for ultrasound scans at U.S. outpatient centers could grow by double digits over the next five years, according to a speaker at AHRA 2019. A variety of factors, however, could cause projections for this and other modalities to change. Graphic courtesy of Pixabay

Feature | Radiology Imaging | July 29, 2019 | By Greg Freiherr
The coming years may be good for the medical imaging community in the United States. But they will not be easy.
Body language expert Traci Brown spoke at the AHRA 2019 meeting on how to identify when a person is not being honest by their body language. She said medical imaging department administrators can use this knowledge to help in hiring decisions and managing staff.

Body language expert Traci Brown spoke at the AHRA 2019 meeting on how to identify when a person is not being honest by their body language. She said medical imaging department administrators can use this knowledge to help in hiring decisions and managing staff. 

Feature | Radiology Business | July 23, 2019 | Greg Freiherr
Can you tell when someone is lying?
John Carrino, M.D., M.Ph., presents “Challenges and Opportunities for Radiology to Prove Value in Alternative Payment Models” at AHRA 2019

John Carrino, M.D., M.Ph., presents “Challenges and Opportunities for Radiology to Prove Value in Alternative Payment Models” at AHRA 2019. Photo by Greg Freiherr

Feature | Radiology Business | July 22, 2019 | By Greg Freiherr
Efforts to reform healthcare are booming, b
Radiology, medical imaging, is facing declining reimbursements, imaging departments continue to comprise a significant portion of the revenue stream in most healthcare organizations. Stewards of these departments are continuously looking for ways to optimize efficiency, increase patient and staff satisfaction, and lower costs without compromising the delivery of excellent patient care. Image by rawpixel from Pixabay

Image by rawpixel from Pixabay 

Feature | Radiology Business | July 18, 2019 | By Stefanie Manack and Judy Zakutny
Approximately 30 percent of a hospital or health system’s profit comes from imaging according, to...
CMS Proposes New Alternative Payment Model for Radiation Oncology
News | Radiation Oncology | July 17, 2019
The Centers for Medicare and Medicaid Services (CMS) issued a proposal for an advanced alternative payment model (APM)...