The health reform law will postpone the projected bankruptcy of the Medicare Hospital Insurance Trust Fund by 12 years, according to the latest annual report from the Social Security and Medicare Boards of Trustees.
The fund, which is where Medicare hospital payments come from, was expected to become insolvent by 2017, according to last year's Trustees' Report. Now that red-letter date will be pushed back to sometime in 2029.
Remember: The Trustees' Report doesn't issue insolvency dates for the Medicare Supplementary Insurance (SMI) program -- which is the source of Part B payments -- because the SMI is expected to be funded into the "indefinite future." This is because current law automatically provides financing for the SMI.
The catch: As Medicare adds more beneficiaries to its ranks, the size of the SMI will grow from 1.9% of GDP in 2009 to an estimated 3.5% of GDP in 2040, according to the Trustees' Report. Not surprisingly, the report doesn't weigh in on how the federal government might act in response that kind of an increase in spending.
The report explains that health reform is expected to reduce costs and improve the health of the Hospital Insurance Trust Fund by slashing Medicare payments for non-physician goods and services, such as DME and supplies. It also tries to account for the savings expected to come from the assorted experimental measures in health reform (innovation board, bundled payments, HIT implementation).
The report's authors do leave themselves a caveat: "If health care efficiency cannot be substantially improved through productivity gains or other measures, then over time the statutory Medicare payment rates would become inadequate." Does that sound familiar?