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CMS forecasts near-term Medicare funding stability, long-term insolvency

April 24, 2012
by Patricia Sheehan
| Reprints

The Affordable Care Act is projected to save Medicare more than $200 billion through 2016, according to The Medicare Trustees Report, released Monday. But beyond 2024, Medicare’s  solvency is in doubt.

The report shows that the Hospital Insurance (HI) Trust Fund is expected to remain solvent until 2024, the same as last year’s estimate. In 2011, the HI Trust Fund expenditures were lower than expected.

The Centers for Medicare & Medicaid Services (CMS) attributes the savings to reform initiatives that are slated to end excessive payments to private insurers that offer Medicare Advantage plans, changes in provider payment policies and fraud-prevention measures.

The report projects that the Supplementary Medical Insurance (SMI) Trust Fund is financially balanced because beneficiary premiums and general revenue financing are set to cover expected program costs. Spending from the Part B account of the SMI trust fund grew at an average rate of 5.9 percent over the last 5 years.

Another report released Monday by the Social Security and Medicare Boards of Trustees projects a grave future for Medicare. Social Security and Medicare are on a road to insolvency in coming decades as a result of slow economic recovery and an aging workforce, according to the trustees. Recent projections have the Medicare hospital insurance fund for seniors running out of funds by 2024, Social Security’s retirement fund by 2038 and a disability fund by 2016.

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