The $574 billion Medicare health system, the second-largest U.S. social services program, will exhaust its main financial trust fund in 2026, two years later than predicted as the Affordable Care Act helps control costs.
Assets for the Part A trust that pays for hospital visits, nursing care and related services for Medicare's 51 million elderly and disabled beneficiaries, fell $23.8 billion in 2012, according to a report today from the program's trustees. That compares with a net drop in assets of $27.7 billion for 2011.
The decrease was the smallest since 2009 as debt-reduction legislation enacted two years ago included payment cuts that begin taking effect this year. The data should be useful in the debate between President Barack Obama and Republicans over the best approach to improving Medicare's long-term footing.
“This is meaningful, but two years, I don't think anyone should get too excited,” said Marilyn Moon, a senior vice president at the American Institutes for Research in Washington. “There is no reason to believe things have gotten worse; things have gotten a little better and we will get some breathing room over time to decide what to do with Medicare.”
Republicans have considered raising the Medicare eligibility age and switching to a system in which beneficiaries get subsidies to buy private insurance, instead of the government paying for their care. Obama has sought to mostly keep the current structure and instead find ways to boost efficiency of the program and reduce excess costs, partly through provisions in the 2010 health-care law he helped create.
In a report released alongside the Medicare data today, the projection for the 2033 exhaustion of the U.S. Social Security trust funds, used to make retirement and disability payments, was left unchanged.