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Tuesday, April 24, 2012

The Medicare Trustees Report and the $8.1 Trillion Double Count

The Medicare Trustees’ Report and the $8.1 Trillion Double Count


The 2012 Medicare and Social Security trustees’ reports have been released (see here and here). The headline is that the Medicare Hospital Insurance (HI) trust fund will have insufficient reserves to pay full benefits beginning in 2024 (the same year that was projected in last year’s report). Social Security will have insufficient reserves beginning in 2033 (three years earlier than projected last year).


The trustees’ reports always contain some interesting information, and that’s true again this year.

In 2010 and 2011, the Office of the Actuary felt compelled to issue separate “alternative” analyses of projected future Medicare spending because the scheduled cuts in reimbursement rates for providers of services to Medicare patients are untethered to reality. If the Medicare cuts planned for in Obamacare were actually to go into effect, Medicare’s reimbursement rates would plummet below those provided even by Medicaid by the end of the decade. If rates fell that low, hospitals and other providers would have no choice but to stop taking care of Medicare enrollees, thus causing severe access problems for seniors. That’s a completely unrealistic scenario for political reasons — Congress would never let it happen — and the actuaries have repeatedly said so over the past three years.

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