{"id":9282,"date":"2016-08-24T21:55:38","date_gmt":"2016-08-24T21:55:38","guid":{"rendered":"https:\/\/www.edrugstore.com\/blog\/?p=9282"},"modified":"2016-08-30T18:55:59","modified_gmt":"2016-08-30T18:55:59","slug":"is-your-medicare-safe","status":"publish","type":"post","link":"https:\/\/www.edrugstore.com\/blog\/current-health-news\/is-your-medicare-safe\/","title":{"rendered":"Is Your Medicare Safe?"},"content":{"rendered":"
\"Medicare\"
Medicare Part A coverage, including hospital care and home health services, is paid out the Hospital Insurance Trust Fund.<\/figcaption><\/figure>\n

If you are one of the millions of Americans who now depend — or soon will depend — on Medicare to cover the bulk of your health care costs, the most recent report from Medicare trustees may have you losing sleep.<\/p>\n

In their annual report<\/a>, released on June 22, 2016, the trustees project that Medicare’s Hospital Insurance Trust Fund will be depleted by 2028, roughly 12 years from now. The projected 2028 depletion date for the hospital fund is two years earlier than was predicted in the Medicare trustees’ 2015 report. While this sounds pretty ominous, it’s not quite as bad as it seems at first glance, nor does it signal an imminent demise of Medicare and the health care benefits it provides for so many Americans.<\/p>\n

What It Really Means<\/b><\/p>\n

In trustee speak, “depleted” or “insolvent” means that the fund will no longer be sufficient to finance 100 percent of Medicare’s hospital insurance benefits if future contributions and draw-down come in at the levels projected by trustees. Thus, even if the hospital insurance fund is totally exhausted in 2028, as predicted by trustees, Medicare would still be able to pay 87 percent of its hospital insurance costs out of incoming payroll taxes and other revenues.<\/p>\n

The share of hospital insurance costs covered by these dedicated revenues would gradually decline to a low of 79 percent in 2040 before recovering to an estimated 86 percent by 2090. However, increased revenues and\/or a slowing in the growth rate of costs could cover the shortfalls that the trustees project. Of these two possibilities, increased revenues — through an increase in Medicare payroll taxes — is by far the most likely.<\/p>\n

\"Medicare\"
Visits to the doctor, lab tests, and prescription drug coverage are paid out of Medicare’s Supplementary Medical Insurance Trust Fund.<\/figcaption><\/figure> Medicare’s 2 Primary Funds<\/b><\/p>\n

It should also be noted that Medicare’s Hospital Insurance Trust Fund is just one of two primary funds from which Medicare benefits are paid. The hospital fund is responsible for Medicare Part A coverage, which covers not only hospital care but also home health services, hospice, nursing home care, and skilled nursing facility care.<\/p>\n

Medicare’s Part B and D coverages are financed out of its Supplementary Medical Insurance Trust Fund, or SMI for short. Part B covers outpatient medical care, including doctor’s visits, some laboratory tests, and some medical equipment, as well as preventive services. Part D of Medicare helps to cover the cost of insureds’ prescription drugs.<\/p>\n

SMI Trust Fund in No Danger<\/b><\/p>\n

While Medicare’s Hospital Insurance Trust Fund is expected to be depleted by 2028, its SMI trust fund, which is subdivided into separate funds for Part B and Part D expenditures, is set up in such a way as to preclude the possibility of insolvency. Premiums for Part B and Part D are set each year at levels calculated to cover roughly 25 percent of annual costs. The remaining 75 percent of costs is funded out of general revenues. According to an article posted at the website of the Center on Budget and Policy Priorities (CBPP), “beneficiary premiums and general revenue contributions are specifically set at levels to assure” the SMI fund’s continued solvency.<\/p>\n

The CBPP article, written by Paul N. Van de Water, also points out that health reform, primarily in the form of the Affordable Care Act, has significantly improved Medicare’s overall financial situation. It has done so by improving the program’s efficiency and boosting revenues. Specifically, writes Van de Water, Medicare’s Hospital Insurance Trust Fund is projected to remain solvent 11 years longer than was expected before Obamacare became the law of the land.<\/p>\n

Shortfall Cut under Obamacare<\/b><\/p>\n

Under the Affordable Care Act, the hospital fund’s projected 75-year shortfall of 0.73 percent of taxable payroll is far lower than the 3.88 percent shortfall that was projected before the passage of the ACA. Van de Water points out that the hospital fund’s projected financing gap could be closed by raising the Medicare payroll tax — now at 1.45 percent each for employee and employer — to about 1.8 percent. Alternatively, the shortfall could also be closed through a combination of more modest payroll tax increases and cuts in coverage.<\/p>\n

The trustees’ annual report for 2016 also shows that Medicare spent $648 billion in 2015 to provide health care to more than 55 million beneficiaries. The trustees predict that total Medicare costs — both the hospital and SMI funds — will grow from about 3.6 percent of U.S. gross domestic product to 5.6 percent of GDP by 2040. Thereafter, say the trustees, total Medicare spending will increase at a more gradual rate, reaching approximately 6 percent of GDP by 2090. GDP represents the total value of products produced and services provided in any given country over a one-year period. The U.S. GDP for calendar 2015 was just shy of $17.95 trillion in 2015, an increase of almost 3.5 percent year over year.<\/p>\n

\"Medicare\"
Medicare Advantage plans are the most likely target for cutbacks should spending reductions be mandated.<\/figcaption><\/figure>\n

No Spending Cuts for 2016<\/b><\/p>\n

One of the health reform measures built into the Affordable Care Act was the creation of the Independent Payment Advisory Board (IPAB), a 15-member panel tasked with finding ways to achieve Medicare savings without negatively affecting coverage or quality of care. The 2016 trustees report indicates that automatic spending cuts initiated by IPAB will not be necessary in 2016.<\/p>\n

However, trustees did predict that, absent a slowdown in the growth of Medicare spending, IPAB might be forced to cut Medicare outlays by 0.2 percent in 2017. Such cuts, if initiated by IPAB in 2017, would not actually take effect until 2019. In discussing the trustees’ most recent report, Paul Spitalnic, chief actuary for the Centers for Medicare and Medicaid Services, said there’s a “fair likelihood” that IPAB would be forced to act in 2017.<\/p>\n

Medicare Advantage Cuts<\/b><\/p>\n

If such cuts are ordered by IPAB in 2017, the most likely target for cutbacks would be Medicare Advantage plans, according to Joe Antos of the American Enterprise Institute. He said that Obamacare provisions limiting the impact of IPAB cuts on beneficiaries would make Medicare Advantage plans the logical target.<\/p>\n

In analyzing the Medicare trustees’ report, health care policy analysts said they expect that one finding from the report is likely to prod Congress into action. That finding calls for an increase in Part B premiums from $121.80 this year to $149 next year for roughly 30 percent of all Medicare enrollees. Congress moved to block a similar premium increase that was called for by trustees in their 2015 report. Those Medicare beneficiaries affected by the rate hike include new enrollees in Medicare, retirees who are not yet collecting Social Security benefits, high-income beneficiaries, and Medicaid recipients.<\/p>\n

To stay on top of the latest developments on the consumer health front, check out our blog<\/a>.<\/p>\n

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If you are one of the millions of Americans who now depend — or soon will depend — on Medicare to cover the bulk of your health care costs, the most recent report from Medicare trustees may have you losing sleep. In their annual report, released on June 22, 2016, the trustees project that Medicare’s […]<\/p>\n","protected":false},"author":1,"featured_media":9319,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_autoblog_aioseo_focus_keyphrase":"","_autoblog_aioseo_title":"","_autoblog_aioseo_description":"","footnotes":""},"categories":[18],"tags":[],"class_list":["post-9282","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-current-health-news"],"acf":[],"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t