Medicare's own health is improving

  • Article by: DAVID LAUTER , Tribune Washington Bureau
  • Updated: July 28, 2014 - 6:45 PM

Report says lower medical inflation has extended trust fund’s life four years.

The life of Medicare’s main trust fund has been extended by four years, the annual report of the Social Security and Medicare trustees said Monday, a further sign of the positive effect of lower medical inflation.

Medicare Part B premiums are expected to remain the same through 2015 because of that improvement, Health and Human Services Secretary Sylvia Burwell told reporters as the report was released.

Medicare is “considerably stronger than it was just four years ago,” she said.

By contrast, the fund that guarantees Social Security disability payments remains in urgent need of a fix, the trustees warned. As they warned in last year’s report, the trustees said the disability fund will run out of money at the end of 2016, meaning that only 81 percent of disability benefits could be paid unless Congress comes up with a solution.

Old-age fund safe til ’33

The status of the larger Old Age and Survivors trust fund remains unchanged, with the balance projected to hit zero in 2033, after which current taxes would cover 77 percent of promised benefits, the report said.

In the short term, the only way to resolve the disability trust fund’s problems will be to change the current rule that allocates taxes between the disability and old-age trust funds, Treasury Secretary Jacob Lew said.

While those problems have remained unchanged, the longer life for Medicare’s Hospital Insurance Trust Fund, which is now projected to remain solvent through 2030, provides the latest evidence of how the slowdown in the growth of medical costs has improved government finances.

The cost per beneficiary for Medicare has remained flat for two years, noted Robert Reischauer, the former director of the Congressional Budget Office who serves as the system’s other public trustee. The projected size of Medicare’s long-term deficit relative to payrolls has been cut by more than one-third since the trustees’ 2012 report, he noted.

Even with those improvements, however, as the number of retirees continues to grow, Medicare will need additional revenue or new steps to hold down costs in order to be fiscally stable, Reischauer warned.

Moreover, he noted, the current positive trends can’t be guaranteed to continue.

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