Medicare Solvency Will Extend To 2029 According To Report

News from a preliminary version of the 2010 Medicare trustees annual report indicates

that Medicare's hospital trust fund will continue to be solvent until 2029.

This is good news, indicates Alan Weinstock, insurance broker at http://www.MedicareSupplementPlans.com, because thats about 12 years longer than previously predicted. It seems the extension is due to a series of improvements expected under the federal health reform law.

Understanding What Lead to the Extension of Medicare Fund

The Medicare trustees, a nonpartisan panel, said that the 12-year extension was based on several assumptions. Two of these assumptions involved efficiency and Medicare payment cuts.

The first expectation is that health care providers will become more efficient and adopt new, less costly ways of delivering care, especially since the reform law seeks to cut Medicare spending over the next 10 years by about $500 billion. The second assumption is that cuts to physician Medicare payments -- a 23% reduction scheduled for Dec. 1 and a 6.5% reduction on Jan. 1 will take effect.

The trustees also reported that the trust fund's projected deficit over the next 75 years -- a time frame that the law requires them to consider -- has significantly decreased.

Impact of the ACA on Medicare Trustees Findings

The Patient Protection and Affordable Care Act, referred to collectively as the Affordable Care Act or ACA, contains roughly 165 provisions affecting the Medicare program. These include reducing costs, increasing revenues, improving certain benefits, combating fraud and abuse, and initiating a major program of research and development for alternative provider payment mechanisms, health care delivery systems, and other changes intended to improve the quality of health care and/or reduce its costs to Medicare.

Though the ACA improves the financial outlook for Medicare substantially, the effects of some of the new laws provisions on Medicare are not known at this time. And experts indicate that Medicare still faces a number of major financial hurdles. Probably the most notable being the impact on the fund if Congress acts to override the scheduled cut to physicians' payments, as it usually does. Then the cost of Medicare Part B -- which covers physician services -- is expected to increase by roughly 8% annually over the next 10 years.

Plus the cost of Medicare Part D, which covers prescription drugs, is projected to increase by 9.4% annually as well. However, about one-quarter of current Medicare beneficiaries along with new beneficiaries and those with relatively high incomes are facing an unusually large premium increase next year.

While the ACA has introduced important changes to the Medicare program that are designed to reduce costs, increase revenues, expand the scope of benefits and encourage the development of new systems of health care delivery that will improve health outcomes and cost efficiency, the financial projections in the trustees report indicate a need for additional steps to address Medicares remaining financial challenges.

by: SophieBen

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