Press Releases - CMS

2013-05-31

Trustees Report shows reduced cost growth, longer Medicare solvency

Friday, May 31, 2013

press@cms.hhs.gov

Trustees Report shows reduced cost growth, longer Medicare solvency

The Medicare Trustees today projected that the trust fund that finances Medicare’s hospital insurance coverage will remain solvent until 2026, two years beyond what was projected in last year’s report.

“The Medicare Hospital Insurance trust fund is projected to be solvent for longer, which is good news for beneficiaries,” said Marilyn Tavenner, Administrator of the Centers for Medicare & Medicaid Services (CMS). “Thanks to the Affordable Care Act, we are taking important steps to improve the delivery of care for seniors with Medicare. These reforms aim to reduce spending while improving the quality of care, and are an important down payment on solving Medicare’s long term financial issues.”

A number of factors have contributed to the improved outlook, including lower-than-expected Part A spending in 2012, and lower projected Medicare Advantage program costs. Recent data from the Medicare Advantage program indicate that certain provisions of the Affordable Care Act will help reduce the growth of spending in this program by more than was previously projected. Partially offsetting these lower spending projections are somewhat lower projected levels of tax revenue.

Medicare spending per beneficiary has grown quite slowly over the past few years and is projected to continue growing slowly over the next several years.  From 2010 to 2012, Medicare spending per beneficiary grew at 1.7 percent annually, more slowly than the average rate of growth in the Consumer Price Index, and substantially more slowly than the per capita rate of growth in the economy.  Thanks in part to the cost controls implemented in the Affordable Care Act, spending is projected to continue to grow slower than the overall economy for the next several years.

The benefits of this slower growth accrue to both tax payers and beneficiaries. For example, although the Part B premium for 2014 will not be determined until later this year, the preliminary estimate in the Report indicates that it will remain unchanged from the 2013 premium.

Background:

In 2012, Medicare covered 50.7 million people: 42.1 million people aged 65 and older, and 8.5 million people with disabilities. About 27 percent of these beneficiaries have chosen to enroll in Part C private health plans that contract with Medicare to deliver Part A and Part B health services. Total expenditures in 2012 were $574.2 billion. Total income was $536.9 billion.

The Medicare Trustees are Treasury Secretary and Managing Trustee Jacob Lew, Health and Human Services Secretary Kathleen Sebelius, Acting Labor Secretary Seth Harris, and Acting Social Security Commissioner Carolyn Colvin. Two other members are public representatives who are appointed by the President, subject to confirmation by the Senate. Charles Blahous III and Robert Reischauer began serving on Sept. 17, 2010.   CMS Administrator Tavenner, is designated as Secretary of the Board.

The report will be available at noon, EST, at www.cms.gov.