News | June 04, 2013

CMS Reports Reduced Cost Growth Will Extend Medicare Solvency

CMS says a number of factors have contributed to the improved outlook

June 4, 2013 — The Medicare trustees have projected that the trust fund that finances Medicare’s hospital insurance coverage will remain solvent until 2026, two years beyond what was projected in last year’s report.

“The Medicare Hospital Insurance trust fund is projected to be solvent for longer, which is good news for beneficiaries,” said Marilyn Tavenner, Administrator of the Centers for Medicare and Medicaid Services (CMS). “Thanks to the Affordable Care Act, we are taking important steps to improve the delivery of care for seniors with Medicare. These reforms aim to reduce spending while improving the quality of care, and they are an important down payment on solving Medicare’s long-term financial issues.”

A number of factors have contributed to the improved outlook, including lower-than-expected Part A spending in 2012, and lower projected Medicare Advantage program costs. Recent data from the Medicare Advantage program indicate that certain provisions of the Affordable Care Act will help reduce the growth of spending in this program by more than was previously projected. Partially offsetting these lower spending projections are somewhat lower projected levels of tax revenue.

Medicare spending per beneficiary has grown quite slowly over the past few years and is projected to continue growing slowly over the next several years. From 2010 to 2012, Medicare spending per beneficiary grew at 1.7 percent annually, more slowly than the average rate of growth in the Consumer Price Index, and substantially more slowly than the per capita rate of growth in the economy. Thanks in part to the cost controls implemented in the Affordable Care Act, spending is projected to continue to grow slower than the overall economy for the next several years.

The benefits of this slower growth accrue to both taxpayers and beneficiaries. For example, although the Part B premium for 2014 will not be determined until later this year, the preliminary estimate in the report indicates that it will remain unchanged from the 2013 premium.

For more information: www.cms.gov

 

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