June 5 (UPI) — Medicare’s Hospital Insurance Trust Fund is expected to run out of funding three years earlier than expected, the program’s trustees said in a report on Tuesday.
Trustees project the trust fund for Medicare Part A, which helps pay for hospital and home health services for senior citizens, will have its funds exhausted by 2026 at which point it will only be able to pay out 91 percent of promised benefits.
The trustees determined the fund isn’t adequately financed over the next 10 years. Its projected income also was lower than estimated in 2017 due to lower payroll taxes attributable to lowered wages for 2017.
“The HI trust fund does not meet either the trustees’ test of short-range financial adequacy or their test of long-range close actuarial balance,” the report stated.
Medicare Part B, which helps seniors pay for doctor’s bills and outpatient expenses, and Part D, which offers prescription drug coverage, are both funded by a combination of premium payments and money from general federal revenue and will be financed in full indefinitely.
“The Part B and Part D accounts in the [Supplementary Medical Insurance] trust fund are expected to be adequately financed because premium income and general revenue income are reset each year to cover expected costs,” the report stated. “Such financing, however, would have to increase faster than the economy to cover expected expenditure growth.”
Medicare covered 58.4 million people, including 49.5 million aged 65 and older and 8.9 million with a disability, at a cost of $710.2 billion in 2017.
The solvency report was the first since the Affordable Care Act’s Independent Payment Advisory Board was repealed as part of the two-year government budget deal signed by President Donald Trump in February.
A companion report by Social Security trustees estimated that the combined trust funds for Social Security, which fund old-age benefits and disability insurance programs, will be depleted by 2034.
At the times the combined reserves are depleted the continuing income of the trust funds would be sufficient to pay 79 percent of scheduled benefits.
