Medicare Trust Fund For Hospital Services To Be Bankrupt In 10 Years

New CBO report states Medicare’s hospital insurance trust fund will be insolvent by 2026

The trust fund for Medicare Part A (hospital insurance) will be bankrupt by 2026 – in just 10 years – according to a new report from the Congressional Budget Office (CBO).

The report, Budget and Economic Outlook: 2016 to 2026, projects that the fund’s annual expenditures will outpace income “in all years through 2026 except for 2018, producing annual deficits…that would rise to $54B in 2025, the final year before the fund was exhausted.”

According to the CBO, Medicare spending rose at 7 percent in 2015, the fastest rate of growth for the program since 2009. Medicare spending is projected to rise by another 5.2 percent in 2016, reaching 3.7 percent of GDP. On average, Medicare spending is projected to increase 6 percent year over year for the next 10 years.

The projected growth in spending is due in part to the increasing number of beneficiaries, with an average increase in Medicare caseloads of 3 percent per year. The number of Medicare beneficiaries is projected to increase by 36 percent by 2026.

Since 2011, the rate of Medicare fee-for-service improper payments has risen steadily from 8.6 percent to 12.1 percent, with a loss of $46B in misbilled taxpayer dollars in 2014 alone.

Senator Claire McCaskill (D-MO), the Chairman and Ranking Member on the U.S. Senate Special Committee on Aging, credited the Recovery Audit Contractor (RAC) Program, which identifies improper Medicare fee-for-service billing and returns overpayments back to the Medicare Trust Funds, for returning $10B back to the program and extending its life by two years. Unfortunately, the RAC Program has been scaled back over the past few years, preventing it from returning improper payments at the same rate of previous years.

“We are absolutely moving in the wrong direction.,” said Kristin Walter, spokesperson for the Council for Medicare Integrity, a nonprofit group that advocates for proper Medicare billing. “With Medicare spending on the rise and Medicare improper billing at historic high levels, it is more important than ever that policy makers champion the RAC Program and increase the recovery of misbilled taxpayer dollars to the Trust Fund. This news will not only negatively impact the 55 million Americans who rely on Medicare today but also anyone who plans to enroll in the future.”

For more information, visit www.medicareintegrity.org

About The Council for Medicare Integrity
The Council for Medicare Integrity is a 501(c)(6) non-profit organization. The Council’s mission is to educate policymakers and other stakeholders regarding the importance of healthcare integrity programs that help Medicare identify and correct improper payments.