Faye, how can this reduction in funding be good?
"The most recent Medicare Trustees report conveys the same message as the last one: On the day that Barack Obama signed the health reform bill, Medicare's long-term unfunded liability fell by $53 trillion. That sum is about three times the size of the entire US economy. And, it gets better. Once the baby boomers work their way through the system, Medicare spending will grow no faster than the payroll taxes, premiums and general revenue transfers that pay for that spending."
Here is a link to that report:
https://www.cms.gov/ReportsTrustFunds/downloads/tr2011.pdf
I will attempt to read through this but I was hoping you might have further info.
I don't like the looks of this:
"In view of the factors described above, it is important to note that the actual future costs for Medicare are likely to exceed those shown by the current-law projections in this report. We recommend that the projections be interpreted as an illustration of the very favorable financial outcomes that would be experienced if the physician fee reductions are implemented and if the productivity adjustments and other cost-reducing measures in the Affordable Care Act can be sustained in the long rangeâ€"and we caution readers to recognize the great uncertainty associated with achieving this outcome. Where possible, we illustrate the potential understatement of Medicare costs and projection results by reference to an alternative projection that assumesâ€"for purposes of illustration onlyâ€"that the physician fee reductions are overridden and that the productivity adjustments are gradually phased out over the 16 years starting in 2020.2"
And then:
"The financial status of the HI trust fund was substantially improved by the lower expenditures and additional tax revenues instituted by the Affordable Care Act. However, the HI trust fund is now estimated to be exhausted in 2024, 5 years earlier than was shown in last year's report, and the fund is not adequately financed over the next 10 years. HI taxable earnings in 2010 were lower than previously estimated, and the rate of growth in these earnings is projected to accelerate and to exceed last year’s growth assumptions in 2011-2019. HI expenditures in 2010 were close to the previous estimate, but the projected level grows more rapidly than shown in last year’s report because of the projected faster growth in earnings. HI expenditures have exceeded income annually since 2008 and are projected to continue doing so through the short-range period until the fund becomes exhausted in 2024. In 2010, $32.3 billion in trust fund assets were redeemed to cover the shortfall of income relative to expenditures. The assets were $272 billion at the beginning of 2011, and the asset balance will fall below the Trustees’ recommended minimum level early in 2011 under the intermediate assumptions, 1 year earlier than estimated in last year’s report. The HI trust fund has not met the Trustees’ formal test of short-range financial adequacy since 2003.
The SMI trust fund is adequately financed over the next 10 years and beyond because premium and general revenue income for Parts B and
Highlights
5
D are reset each year to match expected costs. Part B costs, however, have been increasing rapidly, having averaged 6.9 percent annual growth over the last 5 years, and are likely to continue doing so. Under current law, an average annual growth rate of 4.7 percent is projected for the next 5 years. This rate is unrealistically constrained due to a physician fee reduction of over 29 percent that would occur in 2012 under current law. If Congress overrides this reduction, as they have for 2003 through 2011, the Part B growth rate would instead average 7.5 percent. For Part D, the average annual increase in expenditures is estimated to be 9.7 percent through 2020. The U.S. economy is projected to grow at an average annual rate of 5.2 percent during this period, significantly more slowly than Part D and the probable growth rate for Part B.
Transfers from the general fund are an important source of financing for the SMI trust fund and are central to the automatic financial balance of the fund’s two accounts. Such transfers represent a large and growing requirement for the Federal Budget. SMI general revenues currently equal 1.5 percent of GDP and would increase to an estimated 3.0 percent in 2085 under current law (or to 4.8 percent under the illustrative alternative to current law).
The difference between Medicare’s total outlays and its “dedicated financing sources†is estimated to reach 45 percent of outlays in fiscal year 2011, the first year of the projection. Based on this result, the Board of Trustees is required to issue a determination of projected “excess general revenue Medicare funding†in this report. This is the sixth consecutive such finding, and it again triggers a statutory “Medicare funding warning,†indicating that Federal general revenues are becoming a substantial share of total financing for Medicare. The law directs the President to submit to Congress proposed legislation to respond to the warning within 15 days after the date of the Budget submission for the succeeding year."
:o
Faye?