Saturday, June 1, 2013

The Latest Report On Medicare Shows The Program Is Getting Stronger

The Medicare Trustees had great news for American seniors on Friday: the program’s solvency has been extended for two full years past what the trustees predicted in 2012.

In their annual report, the trustees wrote that Medicare’s hospital insurance trust fund will be fully solvent through 2026. That’s over a decade longer than what the trustees projected back in 2009. In general, Medicare inflation has been lower than general economic growth over the last three years.

That means that the program has more funds to pay for seniors’ medical care, making extreme cost-cutting measures such as slashing benefits for prescription drugs or other services unnecessary. Congressional Republicans have regularly insisted on reducing the federal deficit by making seniors pay more for their medical care.

The upward projections are likely a consequence of several factors. First, the 10-year revision from 2009 is a direct result of Obamacare. The health law takes $700 billion of excessive and wasteful payments made to private providers that service the Medicare Advantage program and reallocates it to traditional Medicare. Conservatives have made the outlandish claim that this “robs Medicare,” when in fact it does the exact opposite, and Republicans have included the same savings in their own budgets.

Then there’s the fact that that health care cost growth has slowed dramatically in recent years. Studies on the exact reason for that slowdown are conflicted on the extent to which it will be permanent. Some experts believe that it is largely due to lower medical consumption because of the recession, and will return to traditionally higher pre-recession levels as the economy gets better.

Others disagree, crediting structural changes to the health care system encouraged by Obamacare. For instance, the health law incentivizes the creation of accountable care organizations (ACOs) in which doctors, nurses, hospitals, social workers, and pharmacists work together to improve seniors’ health and reducing excess Medicare spending.

That’s a more likely explanation, since Obamacare is already fostering these positive collaborations in health care. In fact, the slowdown in health care cost growth has already forced the Congressional Budget Office (CBO) to revise its long-term deficit projection down by more than $500 billion, since Medicare spending is the primary driver of U.S. debt.

Only time will tell if the changes really are permanent. But for now, it seems that Medicare is only getting stronger — and that’s a huge relief for sick American seniors.

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