Medicare Trust Funds Expected to Deplete Sooner than Last Year’s Projection

Medicare trust funds are expected to deplete sooner than projected last year, according to a report released by Medicare trustees. While their 2008 report estimated that funds would run out in 2019, this year’s report predicts that funds will exhaust in 2017. The current economic recession, an increasing need to address the public health crisis, the fast-approaching Medicare eligibility of baby boomers, and the rising cost of healthcare were all cited as reasons for the change.

The trustees projected that in this year already, the Medicare trust fund for hospital costs will pay out more in benefits than it will generate in revenue. Furthermore, hospital expenditures are expected to exceed program revenues by greater amounts with each ensuing year. To reverse this trend, drastic increases in payroll taxes and/or drastic decreases in Medicare outlays would be required.

President Barack Obama and his staff are considering various approaches to address the national healthcare crisis. These include decreasing federal payments to private insurers, more rapid approval of generic drugs, governmental negotiation with pharmaceutical companies to decrease drug prices, and financial penalties for physicians and hospitals that do not meet current quality standards.

The report indicates that Medicare Part B, which covers outpatient expenses, and Part D, which covers prescription drugs, should not encounter financing problems due to laws mandating their funding each year.

To view a summary of the Medicare trustees’ report, please click here.

For more information, please call Abby Pendleton, Esq., Robert Iwrey, Esq., Adrienne Dresevic, Esq., Carey F. Kalmowitz, Esq. or Jessica L. Gustafson, Esq. at (248) 996-8510 or visit The HLP website.

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