Medicare Solvency Timeframe
Reduced by Seven Years
March 26, 2004 - In their annual report
released on March 23, the Medicare Trustees estimated that
the Medicare Part A Trust Fund would remain solvent until
2019 - seven years earlier than they had estimated last year.
This represents the largest one-year drop in the history of
the Medicare program. In addition, the trust fund now fails
its test of short-term solvency, since its projected reserves
fall below the next year's projected spending in less than
10 years, 2012.
The trustees attribute the change in Medicare's financial
status to higher program spending, lower tax revenues than
previously estimated, changes in spending assumptions, updated
information showing sicker patients enrolling in private plans,
and an increase in payments to certain hospitals, such as
rehabilitation facilities. These items account for five of
the seven-year reduction in last year's estimate of insolvency.
The remaining two years are due to provisions in the Medicare
Prescription Drug, Improvement, and Modernization Act of 2003
(MMA) that result higher spending.
Information:
Karen Fisher, Sr. Director, Health Care Affairs
AAMC Health Care Affairs
kfisher@aamc.org
(202) 862-6140
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