Medicare Is Not “Bankrupt” - Health Reform Has Improved Program’s Financing

[JohnWxy]

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http://www.cbpp.org/cms/index.cfm?fa=view&id=3532

Claims by some policymakers that the Medicare program is nearing “bankruptcy” are misleading. Although Medicare faces major financing challenges, the program is not on the verge of bankruptcy or ceasing to operate. Such charges represent misunderstanding (or misrepresentation) of Medicare’s finances.

Medicare’s financing challenges would be significantly greater without the health reform law (the Affordable Care Act, or ACA), which substantially improved the program’s financial outlook. Repealing the Affordable Care Act, a course of action promoted by some who simultaneously claim that the program is approaching “bankruptcy,” would make Medicare’s financial situation much worse.

The 2011 report of Medicare’s trustees finds that Medicare’s Hospital Insurance (HI) trust fund will remain solvent — that is, able to pay 100 percent of the costs of the hospital insurance coverage that Medicare provides — through 2024; at that point, the payroll taxes and other revenue deposited in the trust fund will still be sufficient to pay 90 percent of Medicare hospital insurance costs. <1> (The Medicare hospital insurance program is considered insolvent when revenues and trust fund balances will not cover 100 percent of projected costs.) Over the next 75 years, revenue will cover an average of 83 percent of Medicare’s hospital insurance costs. This shortfall will need to be closed through the provision of additional revenues, program changes that slow the growth in costs, or most likely both. But the Medicare hospital insurance will not run out of all financial resources and cease to operate after 2024, as the “bankruptcy” term may suggest.
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[Igel]

1. Somebody else that thinks the alphabet starts and stops with "A."

Medicare A is what the chart shows. It's fine.

Medicare B and D are basket cases. Now. They're only projected to get worse.

The HCRA ignored a large chunk of Part D spending. That Medicare spending was in a different bill; the HCRA also achieved it's medical cost savings by including savings from the student loan revamping.

Nonetheless, the CBO, using Congress' assumptions, said that the HCRA would "bend down" the Medicare B/D "cost curve". Recently they revised that based upon more realistic projections--this time, given what people have done *since* the HCRA passed. Surprisingly, Congress' assumptions were very, very rosy. Reality for what's been implemented and responded to is a bit worse that the general pessimistic assumptions.

Claiming that those who say Medicare is in fiscal doo-doo because one portion of Medicare is on fairly good (although not perfect) fiscal footing are being disingenous, which is often a nice word for "probably lying or at the very least wilfully misinformed."

[eomer]

2. Parts B and D can't become insolvent, can't go bankrupt, right?

From the article linked by the OP:

The 2024 date does not apply to Medicare coverage for physician and outpatient costs or to the Medicare prescription drug benefit; these parts of Medicare do not face insolvency and cannot run short of funds. These parts of Medicare are financed through the program’s Supplementary Medical Insurance (SMI) trust fund, which consists of two separate accounts — one for Medicare Part B, which pays for physician and other outpatient health services, and one for Part D, which pays for outpatient prescription drugs. Premiums for Part B and Part D are set each year at levels that cover 25 percent of costs; general revenues pay the remaining 75 percent of costs.<2> The trustees’ report does not project that these parts of Medicare will become insolvent at any point — because they can’t. The SMI trust fund always has sufficient financing to cover Part B and Part D costs, because the beneficiary premiums and general revenue contributions are specifically set at levels to assure this is the case. SMI cannot go “bankrupt.”

http://www.cbpp.org/cms/index.cfm?fa=view&id=3532

So can you clarify what you're saying? Parts B and D can't put Medicare into a fiscal (bankruptcy) problem, can they? They can pose a problem with rising costs but not a problem of Medicare insolvency or bankruptcy.