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July 13, 2017
Contact: HHS Press Office
[email protected]

Medicare Trustees Report shows trust fund solvent through 2029

Independent Payment Advisory Board is not triggered

Today, the Medicare Trustees projected that the trust fund financing Medicare’s hospital insurance coverage will be depleted in 2029, one year later than projected in last year’s report. Lower spending in 2016, lower projected inpatient hospital utilization and slightly better projected hospital insurance deficit in 2017 than in 2016 were the contributing factors to the extended solvency projection. Further, because spending levels in Medicare did not exceed its targets, the Independent Payment Advisory Board (IPAB), set up by the Patient Protection and Affordable Care Act (ACA), was not triggered.

“For 51 years, Medicare has played a crucial role in providing healthcare for America’s senior citizens,” said Health and Human Services Secretary Tom Price, M.D. “Unfortunately, on its current trajectory, Medicare’s hospital insurance trust fund will be depleted in just over a decade, while spending on the other elements of the program continues to grow much faster than our economy. As the Trustees Report says, this means that reform to the program is needed. At HHS, we take seriously our responsibility to protect Medicare for this generation and those to come, and we are pursuing all available avenues to improve Medicare’s sustainability in ways that put patients first.”

In 2016, the Medicare program provided health insurance coverage to 56.8 million beneficiaries. Total Medicare expenditures were $679 billion, and income was $710 billion. Total Medicare spending was slightly lower than estimated in last year’s Trustees Report. Outlays were slightly lower for Part A and Part D than previously estimated while Part B expenditures were very close to the 2016 estimate.

“Millions of Americans rely on the healthcare they receive from Medicare,” said CMS Administrator Seema Verma. “As stewards of this program, CMS will continue to do all we can to reduce out-of-pocket costs for beneficiaries and increase the quality of and access to healthcare for our seniors.”

The Trustees project that total Medicare costs will grow from approximately 3.6 percent of GDP in 2016 to 5.6 percent of GDP by 2041 and will increase gradually thereafter to about 5.9 percent of GDP by 2091. This projected cost growth exceeds GDP growth through the mid-2030s and is the direct result of a rapidly aging population, caused by the large baby-boom generation entering retirement, and lower-birth-rate generations entering employment. Growth in expenditures per Medicare beneficiary exceeds growth in per capita GDP over this time period. In later years, projected costs expressed as a share of GDP will rise slowly for Medicare, reflecting very gradual population aging caused by increasing longevity and slower growth in per-beneficiary health care costs.

The Trustees project that the 2018 Part B premium will remain at the 2017 levels and that the Social Security cost of living adjustment would be 2.2 percent. Due to low trend increases and Medicare’s “hold harmless” protection, about 70 percent of Medicare beneficiaries have experienced very modest increases in their Part B premium rates since 2013. Finally, the report also noted that the Supplementary Medical Insurance program (Part B and Prescription Drug Coverage) continue to grow faster than GDP in part due to prescription drug costs rising somewhat more quickly than other medical services.

The Medicare Trustees are: Health and Human Services Secretary, Tom Price, M.D.; Treasury Secretary and Managing Trustee, Steven Mnuchin; Labor Secretary, Alexander Acosta; and Acting Social Security Commissioner, Nancy A. Berryhill. CMS Administrator Seema Verma is the secretary of the board.

A copy of the report is available here: https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/ReportsTrustFunds/index.html

A copy of the IPAB letter can be found here: https://www.cms.gov/Research-Statistics-Data-and-Systems/Research/ActuarialStudies/IPAB-Determination.html

Note: All HHS press releases, fact sheets and other news materials are available at https://www.hhs.gov/news.
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Last revised: July 13, 2017

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